Exhibit 10.61


 


A MARK OF *** IN THE TEXT OF THIS EXHIBIT INDICATES
THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED. 
THIS EXHIBIT, INCLUDING THE OMITTED PORTIONS, HAS BEEN FILED SEPARATELY
WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE
SECURITIES EXCHANGE ACT OF 1934.


 


ASSET PURCHASE AGREEMENT


 


This Asset Purchase Agreement (the “Agreement”) is entered into on October 7,
2005 by and among Neilson Elggren LLP , a Utah limited liability partnership (“Partnership”), Vernon L. Calder (“Calder”), Thomas P. Jeremiassen (“Jeremiassen”), David J. Judd (“Judd”), R. Todd Neilson (“Neilson”), Paul N. Shields (“Shields”), and D. Ray Strong (“Strong”), LECG, LLC, a California limited
liability company (“Purchaser”), and LECG
Corporation, a Delaware corporation (“Parent”).  Calder, Jeremiassen, Judd, Neilson, Shields
and Strong are individually referred to herein each as a “Partner”
and collectively as the “Partners.”  The Partners together with the Partnership
are collectively referred to herein as the “Seller
Entities.”


 


RECITALS


 


A.                                    The
Partnership provides financial and insolvency expert and consulting services
(the “Business”).


 


B.                                    The
Partnership desires to sell to Purchaser, on the terms and conditions set forth
herein, the assets of the Partnership used in the Business, except as otherwise
provided herein.


 


C.                                    Purchaser
desires to purchase the assets of the Partnership used in the Business and is
prepared to assume certain specified liabilities and obligations of the
Partnership on the terms and conditions set forth herein.


 


D.                                    The
Partners are the sole partners of the Partnership and desire that the
transactions described in this Agreement be consummated.


 


E.                                      In
connection with the purchase and sale of substantially all of the assets of the
Partnership, Purchaser will also retain the services of each Partner and F.
Wayne Elggren (each, a “Neilson Director”
and collectively, the “Neilson Directors”)
as an employee of Purchaser pursuant to the terms of an individual Director
Agreement to be entered into by and between Purchaser and each Neilson Director
as of the Closing Date in substantially the form of Exhibits A-1
through A-7 attached hereto (each, individually, a “Director
Agreement”).


 


F.                                      Parent
has agreed to guarantee the payment and performance of Purchaser’s obligations
under this Agreement.


 





















 


TABLE OF CONTENTS


 


	
  1

  	
  CERTAIN
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2

  	
  SALE AND PURCHASE OF ASSETS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Purchased Assets

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Excluded Assets

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  Assumed Liabilities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.4

  	
  Excluded Liabilities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  CONSIDERATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Purchase Price and Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Allocation of Purchase Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Earn Out Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Additional Earnout Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5

  	
  Operational Impact on Earn
  Out Payments and Additional Earnout Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.6

  	
  Accounts Receivable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  COVENANT
  NOT TO COMPETE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Covenant Not to Compete

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Non-Solicitation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Separate Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5

  	
  TRANSFER OF EMPLOYEES AND EMPLOYEE BENEFITS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Workers’ Compensation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Transfer of Employees

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Employee Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6

  	
  THE
  CLOSING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  The Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Seller Entity Deliveries at
  Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3

  	
  Purchaser Deliveries at
  Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  REPRESENTATION AND WARRANTIES OF SELLER ENTITIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Organization and Valid
  Existence

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Partnership Authority

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  No Violations

  	
   

  



 


i





















 


	
   

  	
  7.4

  	
  Financial Statements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.5

  	
  Absence of Certain Changes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.6

  	
  Title to and Condition of
  Purchased Assets

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.7

  	
  Real Estate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.8

  	
  Contracts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.9

  	
  Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.10

  	
  Intellectual Property

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.11

  	
  Compliance with Laws

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.12

  	
  Employee Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.13

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.14

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.15

  	
  Employees; Employment Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.16

  	
  Brokers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.17

  	
  Business Relations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.18

  	
  Warranty; Nonbillable Work

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.19

  	
  Consents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.20

  	
  Schedules

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.21

  	
  1933 Act Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.22

  	
  Information, Experience, and
  Ability to Bear Risk

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.23

  	
  Accuracy of Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.24

  	
  No Other Warranties or
  Representations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  REPRESENTATIONS AND WARRANTIES OF THE PARTNERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Ownership of Partnership
  Equity

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Authority of Partners

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Consents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  No Other Warranties or
  Representations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9

  	
  REPRESENTATIONS OF PURCHASER AND PARENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Organization and Authority

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Authorization of Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3

  	
  No Violations

  	
   

  



 


ii





















 


	
   

  	
  9.4

  	
  Capital Stock

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5

  	
  Litigation; Compliance with
  Law

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.6

  	
  SEC Filings

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.7

  	
  No Finder

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.8

  	
  Consents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.9

  	
  Accuracy of Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10

  	
  PRE-CLOSING
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Affirmative Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  Restrictions on Conduct of
  the Business Prior to Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3

  	
  Certain Notifications by
  Seller Entities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.4

  	
  Risk of Loss

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.5

  	
  Updating the Seller Entities
  Disclosure Schedule

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.6

  	
  Access to Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11

  	
  AFFIRMATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.2

  	
  Public Announcements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.3

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.4

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.5

  	
  Retained Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.6

  	
  Office Leases

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.7

  	
  Updated Financial Statements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12

  	
  CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND PARENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Continued Truth of
  Representations and Warranties; No Breach

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.2

  	
  Absence of Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.3

  	
  Landlord Consents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.4

  	
  No Material Adverse Change

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.5

  	
  Errors and Omissions
  Insurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13

  	
  CONDITIONS TO OBLIGATIONS OF SELLER ENTITIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Continued Truth of
  Representations and Warranties; No Breach

  	
   

  



 


iii





















 


	
   

  	
  13.2

  	
  Absence of Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.3

  	
  Landlord Consents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.4

  	
  No Material Adverse Change

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14

  	
  SURVIVAL OF REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Indemnification By Seller
  Entities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.2

  	
  Indemnification by Purchaser
  and Parent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.3

  	
  Limitations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.4

  	
  Insurance and Tax Effect

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16

  	
  RIGHT
  OF OFFSET

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  17

  	
  TERMINATION OF AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  18

  	
  EFFECT
  OF TERMINATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  19

  	
  ***

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  20

  	
  EXPENSES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  21

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  22

  	
  SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  23

  	
  ARTICLE AND SECTION HEADINGS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  24

  	
  GOVERNING LAW; CONSENT TO SERVICE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  25

  	
  DISPUTE
  RESOLUTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  26

  	
  ENTIRE
  AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  27

  	
  SURVIVAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  28

  	
  PARENT
  GUARANTY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  29

  	
  COUNTERPARTS

  	
   

  



 


A mark of *** on this page indicates that confidential material has
been omitted.


This Exhibit, including the omitted portions, has been filed separately
with the Secretary of the


Securities and Exchange Commission pursuant to an application requesting
confidential


treatment under Rule 24b-2 of the Securities Exchange Act of 1934.


 


iv





















 


LIST OF EXHIBITS(1)


 


	
  Exhibits A-1 through A-7

  	
   

  	
  Forms of Director Agreements

  
	
  Exhibit B

  	
   

  	
  Purchaser’s Code of Conduct

  
	
  Exhibit C

  	
   

  	
  Form of Assignment and Assumption
  Agreement

  
	
  Exhibit D

  	
   

  	
  Form of Bill of Sale

  
	
  Exhibit E

  	
   

  	
  Form of Opinion of Counsel to Seller
  Entities

  
	
  Exhibit F-1

  	
   

  	
  Form of Assignment of Los Angeles
  Sublease

  
	
  Exhibit F-2

  	
   

  	
  Form of Assignment of Salt Lake City
  Lease

  
	
  Exhibit F-3

  	
   

  	
  Form of Assignment of Wilmington Lease

  
	
  Exhibit G

  	
   

  	
  Financial Statements

  
	
  Exhibit H

  	
   

  	
  Form of Estoppel Certificate

  
	
  Exhibit I

  	
   

  	
  Form of Partnership Closing
  Certificate

  
	
  Exhibit J

  	
   

  	
  Form of Purchaser Closing Certificate

  
	
  Exhibit K

  	
   

  	
  Form of Parent Closing Certificate

  



 


LIST OF SCHEDULES(2)


 


	
  Schedule 2.1.1

  	
   

  	
  Fixed Assets

  
	
  Schedule 2.1.5

  	
   

  	
  Deposits and Prepayments

  
	
  Schedule 2.1.6

  	
   

  	
  Cash

  
	
  Schedule 2.2.11

  	
   

  	
  Salt Lake City Artwork

  
	
  Schedule 3.1.2

  	
   

  	
  Parent Stock; Partner Percentage Interest

  
	
  Schedule 3.6

  	
   

  	
  Accounts Receivable

  
	
  Schedule 5.1

  	
   

  	
  Workers’ Compensation

  
	
  Schedule 7.5

  	
   

  	
  Absence of Certain Changes

  
	
  Schedule 7.6

  	
   

  	
  Permitted Liens

  
	
  Schedule 7.8

  	
   

  	
  Contracts

  
	
  Schedule 7.9

  	
   

  	
  Litigation

  
	
  Schedule 7.10

  	
   

  	
  Intellectual Property

  
	
  Schedule 7.12

  	
   

  	
  Employee Benefit Plan

  
	
  Schedule 7.13

  	
   

  	
  Taxes

  
	
  Schedule 7.14

  	
   

  	
  Insurance Policies

  
	
  Schedule 7.15

  	
   

  	
  Employees

  
	
  Schedule 7.17

  	
   

  	
  Business Relations

  



 










(1) Pursuant
to Item 601(b)(2) of Subpart § 229.601 of Regulation S-K, the Exhibits to this
Asset Purchase Agreement briefly described in this Table of Contents have been
omitted from Exhibit 10.61 furnished in connection with LECG Corporation’s
electronic filing of Form 10-Q on November 9, 2005.  LECG Corporation agrees to furnish a copy of
any omitted Exhibit to the Securities and Exchange Commission upon request.


 


(2) Pursuant
to Item 601(b)(2) of Subpart § 229.601 of Regulation S-K, the Schedules to this
Asset Purchase Agreement briefly described in this Table of Contents have been
omitted from Exhibit 10.61 furnished in connection with LECG Corporation’s
electronic filing of Form 10-Q on November 9, 2005.  LECG Corporation agrees to furnish a copy of
any omitted Schedule to the Securities and Exchange Commission upon request.


 





















 


AGREEMENT


 


In consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:


 


1                                         Certain
Definitions.


 


As used herein, the following terms will have the
meanings indicated.


 


“1933 Act”  has the meaning given in Section 7.21.


 


“1934 Act” has the meaning given in Section 9.6.


 


“Accounts Receivable” has the meaning
given in Section 2.2.6.


 


“Additional Earnout Payment” has the
meaning given in Section 3.4.


 


“Agreement” has the meaning given in
the Preamble.


 


“Allocation Schedule” has the meaning
given in Section 3.2.


 


“Arbitrator” has the meaning given in
Section 19.


 


“Assignment and Assumption Agreement”
has the meaning given in Section 2.3.


 


“Assumed Liabilities” has the meaning
given in Section 2.3.


 


“Basket” has the meaning given in Section 15.3.1.


 


“Business” has the meaning given in
Recital A to this Agreement.


 


“Calder” has the meaning given in the
Preamble.


 


“Cause” means any of the following
grounds for termination by Purchaser of the employment of a Neilson Director: (i) commission
of a felony; (ii) the commission of any willful act or willful omission
involving dishonesty or fraud with respect to Purchaser or Parent or involving
illegal harassment of or illegal discrimination against any employee of
Purchaser or Parent; (iii) willful misappropriation of funds or assets of
Purchaser or Parent for personal use; (iv) failure to perform material
duties (other than as a result of incapacity due to physical or mental illness
lasting not more than 120 days in any 12-month period or an excused absence)
under such Neilson Director’s Director Agreement that is not cured within 30
days after written notice from Purchaser describing such failure to perform and
demanding immediate performance; provided, however, that if a
cure is not practical within 30 days, and such Neilson Director commences to
effect a cure within the foregoing 30-day period, such Neilson Director will be
permitted reasonable additional time to cure so long as he diligently continues
to seek to effect a cure; (v) gross negligence or willful misconduct in
the performance of material duties under such Neilson Director’s Director
Agreement that is capable of cure and is not cured


 


2





















 


A mark of *** on this page indicates that confidential material has
been omitted. This Exhibit, including the omitted portions, has been filed
separately with the Secretary of the Securities and Exchange Commission
pursuant to an application requesting confidential treatment under Rule 24b-2
of the Securities Exchange Act of 1934.


 


within 10 days
after written notice from Purchaser describing such negligence or misconduct; provided,
however, that if a cure is not practical within 10 days, and such
Neilson Director commences to effect a cure within the foregoing 10-day period,
such Neilson Director will be permitted reasonable additional time to cure so
long as he diligently continues to seek to effect a cure; (vi) a breach of
this Agreement by a Neilson Director that involves fraud, or a material breach
of Section 4 of this Agreement that is not cured within 30 days after
written notice from Purchaser describing such breach; or (vii) a material
willful breach by a Neilson Director of Purchaser’s Corporate Code of Conduct,
as may be amended by Purchaser from time to time.  A copy of Purchaser’s Corporate Code of
Conduct is attached hereto as Exhibit B.


 


“Closing” has the meaning given in Section 6.1.


 


“Closing Date” has the meaning given
in Section 6.1.


 


“Closing Payment” has the meaning
given in Section 3.1.


 


“Code” means the Internal Revenue
Code of 1986, as amended.


 


“Contracts” has the meaning given in Section 7.8.


 


“Cost of Services” for any Measurement
Period means ***.


 


“Delivery Instructions” has the
meaning given in Section 3.3.4.


 


“Director Agreement” has the meaning
given in Recital E to this Agreement.


 


“Dispute” has the meaning given in Section 25.


 


“Distributee” has the meaning given
in Section 7.21.


 


“Documents” has the meaning given in Section 2.1.10.


 


“Earn Out Accounting” has the meaning
given in Section 3.3.3.


 


“Earn Out Maximum” has the meaning
given in Section 3.3.1.


 


“Earn Out Payment” and “Earn Out
Payments” have the meanings given in Section 3.3.1.


 


“Earn Out Period” has the meaning
given in Section 3.3.1.


 


“Earn Out Percentage” has the meaning
given in Section 3.3.2.


 


“Effective Time” has the meaning
given in Section 6.1.


 


3





















 


A mark of *** on this page indicates that confidential material has
been omitted. This Exhibit, including the omitted portions, has been filed
separately with the Secretary of the Securities and Exchange Commission
pursuant to an application requesting confidential treatment under Rule 24b-2
of the Securities Exchange Act of 1934.


 


“Enforceability Limitations” means (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 equitable remedies.


 


“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, partner, consultant or independent contractor of the Partnership and
identified on Schedule 7.12.


 


“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended.


 


“Errors and Omissions Tail Policy”
has the meaning given in Section 12.5.


 


“Estoppel Certificate” has the
meaning given in Section 10.1.4.


 


“Excluded Assets” has the meaning
given in Section 2.2.


 


“Excluded Liabilities” has the
meaning given in Section 2.4.


 


“Financial Statements” has the
meaning given in Section 7.4.


 


“Fixed Assets” has the meaning given
in Section 2.1.1.


 


“GAAP” means generally accepted
accounting principles as applied in the United States.


 


“Good Reason” means either of the
following grounds for the termination by a Neilson Director of his or her
employment with Purchaser: (a) a willful failure by Purchaser or Parent to
pay a monetary obligation or monetary obligations exceeding (i) *** in the
aggregate to such Partner under his or her Director Agreement or (ii) ***
to the Partnership under this Agreement, which non-payment is not cured within
30 days after written notice from such Partner or the Partnership, as
applicable, describing such failure to pay; provided, however, that a failure
by Purchaser or Parent to pay a monetary obligation (A) under such Partner’s
Director Agreement because of a good faith disagreement with such Partner over
the amount owed or (B) under this Agreement that is the subject of a
pending disagreement resolution procedure under Section 25 will not
constitute Good Reason; or (b) the termination of employment of two (2) or
more Neilson Directors by LECG on or before October 1, 2010 for any reason
other than Cause.


 


4





















 


A mark of *** on this page indicates that confidential material has
been omitted. This Exhibit, including the omitted portions, has been filed
separately with the Secretary of the Securities and Exchange Commission
pursuant to an application requesting confidential treatment under Rule 24b-2
of the Securities Exchange Act of 1934.


 


“Governmental Body” means any
foreign, federal, state, local or other governmental authority or regulatory
body.


 


“Gross Margin” means ***.  Gross Margin will be expressed as a
percentage.


 


“Gross Margin Targets” has the
meaning given in Section 3.3.2.


 


“Gross Profit” means ***.


 


“Gross Revenue” for any Measurement
Period means ***.


 


“Hired Employees” has the meaning
given in Section 5.2.


 


“Intellectual Property Rights” means
the following: (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 research, techniques, models,
databases, specifications, customer and supplier lists, pricing and cost information,
means and methods of doing business, and business and marketing plans and
proposals), (d) all proprietary rights, databases and computer models, (e) all
copies and tangible embodiments of the foregoing (in whatever form or medium),
and (f) any remedies against infringements thereof and rights to
protection of interest therein under the laws of all jurisdictions (including
foreign jurisdictions).


 


“Interim Financial Statement” has the
meaning given in Section 7.4.


 


“Interim Financial Statement Date” has
the meaning given in Section 7.4.


 


“IP Assets” has the meaning given in Section 2.1.3.


 


“Jeremiassen” has the meaning given
in the Preamble.


 


“Judd” has the meaning given in the
Preamble.


 


“Knowledge” of the Partnership or the
Partners means (i) facts or matters actually known by one or more
Partners, and (ii) facts or matters that any of the Partners should know
or could be reasonably expected to discover following a reasonable inquiry with
respect to such matter.


 


“Liens” has the meaning given in Section 7.6.


 


“Los Angeles Sublease” has the
meaning given in Section 2.1.11.


 


5





















 


A mark of *** on this page indicates that confidential material has
been omitted. This Exhibit, including the omitted portions, has been filed
separately with the Secretary of the Securities and Exchange Commission
pursuant to an application requesting confidential treatment under Rule 24b-2
of the Securities Exchange Act of 1934.


 


“Los Angeles Sublease Assignment”  has the meaning given in Section 6.2.6.


 


“Losses” has the meaning given in Section 15.1.


 


“Material” and “Materially” or any
variation thereof, means, with respect to an obligation, contract, commitment
or Lien, any obligation, contract, commitment or Lien that requires an expenditure
of more than *** over the entire term of such obligation, contract, commitment
or Lien.


 


“Material Adverse Change” or “Material
Adverse Effect” means a Material adverse change in, or effect on, the business,
assets (including intangible assets), financial condition or results of
operations of the Partnership, the Purchaser or the Parent, as applicable.


 


“Measurement Period” has the meaning
given in Section 3.3.2.


 


“Mediation Notice” has the meaning
given in Section 25.


 


“Mediator” has the meaning given in Section 25.


 


“Neilson” has the meaning given in
the Preamble.


 


“Neilson Director” and “Neilson
Directors” have the meanings given in Recital E of this Agreement.


 


“Neilson Practice” means the client
matters of any type, the engagement for which is attributable to the Neilson
Directors or employees of the Neilson Practice in accordance with Purchaser’s
standard practice, without regard to who actually renders services.  To the extent any client matter is secured
partially by the Neilson Directors and partially by others, such matter will be
attributable to the Neilson Practice in a manner consistent with Purchaser’s
standard practice.


 


“Net Loss” has the meaning given in Section 15.4.1.


 


“Office Leases” has the meaning given
in Section 2.1.11.


 


“Parent” has the meaning given in the
Preamble.


 


“Parent Stock” has the meaning given
in Section 3.1.2.


 


“Parent SEC Report” has the meaning
given in Section 9.6.


 


“Partner” and “Partners” have the
meanings given in the Preamble.


 


6





















 


A mark of *** on this page indicates that confidential material has
been omitted. This Exhibit, including the omitted portions, has been filed
separately with the Secretary of the Securities and Exchange Commission
pursuant to an application requesting confidential treatment under Rule 24b-2
of the Securities Exchange Act of 1934.


 


“Partner Percentage Interest” means
each Partner’s percentage ownership interest in the Partnership as set forth on
Schedule 3.1.2 attached hereto and incorporated herein by this
reference.


 


“Partner Restrictive Period” means ***.


 


“Partnership” has the meaning given
in the Preamble.  If the Partnership is
dissolved or otherwise ceases to exist as an entity at any time after the date
hereof, “Partnership” will be deemed to mean any entity created to administer
the dissolution and liquidation of Partnership, and if no such entity is
created, then the Partners, jointly and severally, as successors in interest to
the Partnership.


 


“Partnership Agreement” means the
partnership agreement, or similar governance document, of the Partnership, as
amended, restated, and/or reconstituted from time to time.


 


“Partnership Restrictive Period”
means ***.


 


“Partnership Funds” has the meaning
given in Section 11.4.3.


 


“Patriot Act” means the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended.


 


“Permitted Liens” means those Liens
that Purchaser and the Seller Entities have mutually agreed will remain in
place against the Purchased Assets as of the Closing Date, and which Liens are
listed on Schedule 7.6 attached hereto.


 


“Person” means any individual,
corporation, partnership, joint venture, limited liability company,
association, joint-stock company, trust, unincorporated organization or
Governmental Body.


 


“Proposing Party” has the meaning given
in Section 25.


 


“Protected Party” has the meaning
given in Section 11.1.


 


“Purchase Price” has the meaning
given in Section 3.1.


 


“Purchased Assets” has the meaning
given in Section 2.1.


 


“Purchaser” has the meaning given in
the Preamble hereof.


 


“Purchaser Funds” has the meaning
given in Section 11.4.2.


 


7





















 


“Purchaser Party” has the meaning given
in Section 15.1.


 


“Recipient” has the meaning given in Section 11.1.


 


“Representative” means the Person
authorized by the Seller Entities to give instructions, take actions, perform
duties, respond to inquiries from Purchaser or Parent, and otherwise represent
the interests of the Seller Entities for purposes of this Agreement.  The Representative will be David Judd until
changed by advance written notice to Purchaser. 
All acts taken by the Representative after the Closing will be binding
on the Seller Entities for all purposes, and Purchaser and Parent may rely on
the authority of the Representative for all purposes.


 


“Restricted Activities” means the
Business conducted by the Partnership on or prior to the Closing Date; provided,
however, that providing services as an employee of a college, university
or other educational institution or as an employee of a Governmental Body will
not constitute Restricted Activities.


 


“Retained Business Records” has the
meaning given in Section 11.5.


 


“Salt Lake City Lease” has the
meaning given in Section 2.1.11.


 


“Salt Lake City Lease Assignment” has
the meaning given in Section 6.2.7.


 


“Seller Entities” has the meaning
given in the Preamble hereof.


 


“Seller Party” has the meaning given
in Section 15.2.


 


“Shields” has the meaning given in
the Preamble hereof.


 


“Strong” has the meaning given in the
Preamble hereof.


 


“Tax” (and “Taxes”)
means (i) 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 (ii) any
other tax custom, duty, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest or any penalty thereon, addition
to tax or additional amount imposed by any taxing authority.


 


“Territory” means the locations
within the United States and locations within other countries throughout the
world, if any, where the Partnership conducts the Business as of the Closing Date.


 


“Third Person Licenses” means the
Partnership’s licenses to third Person software and other technology used by
the Partnership in connection with the Business as currently conducted, which
licenses are capable of assignment and are listed on Schedule 7.10.2.


 


“Transaction Documents” has the
meaning given in Section 3.1.


 


8





















 


“Transferred Business Records” has the
meaning given in Section 11.5.


 


“WARN Act” has the meaning given in Section 5.2.


 


“Wilmington Lease” has the meaning
given in Section 2.1.11.


 


“Wilmington Lease Assignment” has the
meaning given in Section 6.2.8.


 


“Year-End Financial Statements” has the
meaning given in Section 7.4.


 


2                                         Sale
And Purchase Of Assets.


 


2.1                               Purchased
Assets.  Subject to the terms and
conditions of this Agreement, on the Closing Date, the Partnership will sell,
convey, assign, transfer and deliver to Purchaser and Purchaser will purchase,
receive and accept delivery from the Partnership, free and clear of all Liens
(other than Permitted Liens), all of the Partnership’s then existing properties
and assets (other than the Excluded Assets) of every kind and nature, real,
personal or mixed, tangible or intangible, wherever located, used in connection
with the Business (collectively, the “Purchased Assets”),
including, without limitation, all right, title and interest of the Partnership
in, to and under:


 


2.1.1                        All
equipment and physical plant, including, without limitation, furniture,
furnishings, trade fixtures, leasehold improvements, computers, servers,
telephone equipment and all other owned and leased tangible personal property
owned or leased under a financing lease by the Partnership and used in the
Business as listed on Schedule 2.1.1 attached hereto and
incorporated herein by this reference (the “Fixed
Assets”);


 


2.1.2                        All of the
assets reflected on the Interim Financial Statement, other than the Excluded
Assets and those assets disposed of after the Interim Financial Statement Date
in the ordinary course of business consistent with past practice;


 


2.1.3                        All
Intellectual Property Rights owned and used by the Partnership in connection
with the Business as currently conducted that are capable of assignment (“IP Assets”) and the goodwill
associated therewith, including, without limitation, the trade name “Neilson
Elggren.”


 


2.1.4                        All of the
Contracts, including, without limitation, the Third Person Licenses;


 


2.1.5                        All rights
to payment as a consequence of (i) deposits and prepayments, including,
without limitation, the deposits under the Salt Lake City Lease, the Wilmington
Lease and the Los Angeles Sublease, listed on Schedule 2.1.5 attached
hereto and incorporated herein by this reference, and (ii) refunds, rights
of set off, rights of recovery, rights to payment or proceeds under contracts
of insurance to the extent applicable to an Assumed Liability, and claims or
causes of action relating to the Purchased Assets that arise on or after the
Closing (except for refunds of Taxes to the extent provided in Section 11.3);
provided, however, that nothing in the foregoing will be


 


9





















 


construed to
prevent the Partnership from asserting any such rights, claims or causes of
action as a defense in any legal proceeding;


 


2.1.6                        Cash in an
amount equal to the sum of (a) all client retainer balances that have been
paid but not applied as of the Closing Date, as set forth in Schedule 2.1.6
and (b) payments received from clients for services that have not been
rendered as of the Closing Date, as set forth in Schedule 2.1.6;


 


2.1.7                        All
general intangibles owned by the Partnership and used by the Business,
including, without limitation, all goodwill of the Partnership;


 


2.1.8                        All other
assets of the Partnership used in the conduct of the Business, whether or not
reflected on the books or records of the Partnership or the Business;


 


2.1.9                        All
creative materials, advertising and promotional materials used in connection
with the Business, wherever stored or located;


 


2.1.10                  All files,
documents, correspondence, studies, reports, books and records of the
Partnership (including all data and other information stored on discs, tapes or
other media), client lists, client records and credit data, computer programs,
software, and hardware owned and used by the Partnership in connection with the
Business (collectively, the “Documents”);
and


 


2.1.11                  All rights and
obligations of the Partnership under (i) that certain Lease dated the
month of August, 2000, by and between the Partnership, as tenant, and Phoenix
Home Life Mutual Insurance Company, as landlord, for the premises at 230 South
500 East, Suite 425, Salt Lake City, Utah 84102 (the “Salt
Lake City Lease”); (ii) that certain oral sublease
agreement having a commencement date of October 15, 2000 by and between
the Partnership, as sub-tenant, and Pachulski, Stang, Ziehl, Young, Jones &
Weintraub PC., as sub-landlord, for premises in the building located at 10100
Santa Monica Boulevard, Los Angeles, California 90067 (the “Los Angeles Sublease”); and (iii) that
certain Lease dated April 16, 2001, by and among the Partnership and
Crossroads, LLC, as co-tenants, and Wilmington Center LLC, as landlord, for the
premises at 919 N. Market Street, Suite 590, Wilmington, Delaware 19801
(the “Wilmington Lease”).  The Salt Lake City Lease, Los Angeles
Sublease and the Wilmington Lease are collectively referred to as the “Office Leases.”


 


2.2                               Excluded
Assets.  Notwithstanding the
provisions of Section 2.1, the Purchased Assets will not include the
following (collectively, the “Excluded Assets”):


 


2.2.1                        All
partnership interests, certificates, books and records relating to the
formation, maintenance and existence of the Partnership as a limited liability
partnership;


 


2.2.2                        All
taxpayer and other identification numbers;


 


10





















 


2.2.3                        All Tax
returns filed by the Partners and the Partnership and associated Tax records;


 


2.2.4                        Any
contracts, agreements or understandings between or among the Partnership and
the Neilson Directors;


 


2.2.5                        The
insurance policies set forth in Schedule 7.14 and all prepaid
expenses and deposits related thereto, subject, however, to Purchaser’s rights
under Section 2.1.5 under claims-made insurance policies;


 


2.2.6                        All work
in process and accounts receivable, including billable expenses, whether billed
or unbilled, with respect to client work of the Partnership that has been
performed as of the Closing Date (“Accounts Receivable”);


 


2.2.7                        All cash
of the Partnership as of the Closing Date in excess of the cash amount
specified in Section 2.1.6;


 


2.2.8                        All rights
of the Partnership under this Agreement;


 


2.2.9                        All
Retained Business Records;


 


2.2.10                  All rights to
payment as a consequence of refunds, rights of set off, rights of recovery, and
claims or causes of action relating to the Business (including Tax refunds)
arising out of the operations of the Partnership prior to the Closing; and


 


2.2.11                  The artwork
currently located at the Partnership’s Salt Lake City office, as set forth in Schedule 2.2.11.


 


2.3                               Assumed
Liabilities.  On the Closing
Date, Purchaser and the Partnership will enter into an assignment and
assumption agreement in substantially the form attached hereto as Exhibit C
(the “Assignment and Assumption Agreement”)
pursuant to which the Partnership will assign, and Purchaser will assume and
agree to perform, discharge and satisfy, in accordance with their respective
terms and subject to the respective conditions thereof, only the following
obligations and liabilities of the Partnership (the “Assumed
Liabilities”): (a) all liabilities and obligations of the
Partnership incurred, attributable to or otherwise arising under the Contracts
and the Office Leases on or after the Closing Date; (b) obligations and
liabilities relating to client retainer balances that are transferred to
Purchaser under Section 2.1.6; and (c) all other liabilities and
obligations incurred on or after the Closing Date in connection with or arising
from the conduct of the Business by Purchaser.


 


2.4                               Excluded
Liabilities.  Notwithstanding
anything to the contrary contained in this Agreement, Purchaser will not assume
or be liable for, and the Partnership will retain and remain responsible for,
all of the Partnership’s debts, 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, whether
related to the Purchased Assets, the Business, or otherwise, and regardless of
when asserted (the “Excluded Liabilities”).  Without limiting the scope of Excluded


 


11





















 


Liabilities under
this Section 2.4, Excluded Liabilities will specifically include (a) any
liabilities with respect to Taxes for which the Partnership is liable pursuant
to Section 11.3 hereof, (b) all liabilities and obligations of the
Partnership arising out of any actions or omissions of employees, consultants,
independent contractors and experts of any kind, including, without limitation,
in connection with the performance of services for clients of the Partnership
prior to the Closing Date, and unlawful discrimination or harassment, or (c) any
costs and expenses incurred by the Seller Entities incident to the negotiation
and preparation of this Agreement and their performance and compliance with the
agreements and conditions contained herein.


 


3                                         Consideration.


 


3.1                               Purchase
Price and Payment.  The purchase
price for the Purchased Assets and the Assumed Liabilities (the “Purchase Price”) is Four Million
Dollars ($4,000,000) (the “Closing Payment”)
plus an amount equal to the Earn Out Payments and the Additional Earnout
Payment, if any, made to the Partnership under Section 3.3.  As partial consideration for the sale,
assignment, transfer and delivery of the Purchased Assets, the assumption of
the Assumed Liabilities, and the execution and delivery of this Agreement and
any related documents referenced herein (collectively, the “Transaction Documents”) by the
Partnership to Purchaser, Purchaser will make the Closing Payment at the
Closing as follows:


 


3.1.1                        Purchaser
will pay the Partnership Three Million Seven Hundred Fifty Thousand Dollars
($3,750,000) in cash by wire transfer of immediately available funds pursuant
to wire instructions that the Partnership will supply to Purchaser at least
three (3) business days prior to the Closing Date; and


 


3.1.2                        Purchaser
will cause Parent to issue to the Partnership a number of unregistered shares
of the common stock of Parent (“Parent Stock”)
calculated by dividing Two Hundred Fifty Thousand Dollars ($250,000) by the
average closing price of Parent’s common stock on NASDAQ for the twenty (20)
trading days immediately preceding the date of this Agreement (within four (4) business
days of which date Purchaser will make a public announcement of the execution
of this Agreement).  The certificate
representing the Parent Stock will be delivered to the Partnership by Parent at
the Closing.  Promptly following the
Closing Date, at the Partnership’s direction and upon receipt of a duly executed
stock power by the Partnership, Parent will facilitate the distribution of the
Parent Stock by the Partnership to the Partners in such percentages as reflect
their current ownership interest in the Partnership all as are listed on Schedule 3.1.2,
by reissuing stock certificates to such Distributees.


 


3.2                               Allocation
of Purchase Price.  The Purchase Price
for the Assets will be allocated as set forth on the attached allocation schedule (the
“Allocation Schedule”) which
Purchaser and the Partnership agree is reasonable and prepared in accordance
with the requirements of Section 1060 of the Code, and the regulations
promulgated thereunder.  After the
Closing, Purchaser and the Partnership will each file Internal Revenue Service Form 8594,
and all federal, state, local and foreign Tax returns, consistent with the
Allocation Schedule.  Purchaser and the
Partnership each agrees to


 


12





















 


A mark of *** on this page indicates that confidential material has
been omitted. This Exhibit, including the omitted portions, has been filed
separately with the Secretary of the Securities and Exchange Commission
pursuant to an application requesting confidential treatment under Rule 24b-2
of the Securities Exchange Act of 1934.


 


provide the other
promptly with any other information required to complete Form 8594.  With respect to any Tax returns filed by the
Partnership, Partners, Purchaser or Parent, (i) no party will take a
position on any Tax return (including IRS Form 8594), before any Tax
Authority or in any judicial proceeding, that is in any way inconsistent with
the Allocation Schedule without the written consent of both the
Partnership and the Purchaser or unless specifically required pursuant to a
determination by an applicable Tax Authority; (ii) the parties will
cooperate with each other in connection with the preparation, execution and
filing of all Tax returns related to the Allocation Schedule; and (iii) the
parties will promptly advise each other regarding the existence of any Tax
audit, controversy or litigation related to such allocation.  All Earn Out Payments and any Additional
Earnout Payment not otherwise allocated on the Allocation Schedule will be
allocated to goodwill.


 


3.3                               Earn
Out Payments.


 


3.3.1                        In addition
to the Closing Payment set forth in Section 3.1, and subject to the
conditions set forth in this Section 3.3, Purchaser will make payments
(each, an “Earn Out Payment” and
collectively, the “Earn Out Payments”) to the
Partnership in an amount of up to Three Million Seven Hundred Fifty Thousand
Dollars ($3,750,000) in the aggregate (the “Earn
Out Maximum”) during the period from the Closing Date through
the earlier of October 31, 2010 or the expiration of the Measurement
Period during which an Earn Out Payment is earned (and subsequently paid) such
that the aggregate amount of Earn Out Payments equals the Earn Out Maximum (the
“Earn Out Period”).


 


3.3.2                        The amount
of each Earn Out Payment will be equal to *** for each 12-month period
beginning November 1 and ending October 31 of the following year
(each such period, a “Measurement Period”)***.  Purchaser will deliver each Earn Out Payment
to the Partnership on January 1 following the end of each Measurement
Period.  Provided that the economics of
the Earn Out Payments are unaffected, the Seller Entities and Purchaser may
mutually agree at any point after the Closing to re-define the Measurement
Periods for purposes of calculating the Earn Out Payments as commencing on January 1
and ending on December 31 of the following year (except with respect to
the final Measurement Period, which will end on October 31 of the
applicable year), in which case each Earn Out Payment will be delivered no
later than March 31 following the end of each such re-defined Measurement
Period (except with respect to the final Measurement Period, for which the
payment date will remain January 1). 
The amount of any Earn Out Payment will be unlimited, subject only to
the Earn Out Maximum.  Accordingly, after
the aggregate amount of Earn Out Payments equals the Earn Out Maximum, no
subsequent Earn Out Payments otherwise capable of being earned during the Earn
Out Period will be due and payable.


 


***


 


13





















 


A mark of *** on this page indicates that confidential material has
been omitted. This Exhibit, including the omitted portions, has been filed
separately with the Secretary of the Securities and Exchange Commission
pursuant to an application requesting confidential treatment under Rule 24b-2
of the Securities Exchange Act of 1934.


 


3.3.3                        Within
sixty (60) days after the end of each quarter during the Earn Out Period,
Purchaser will issue a report to the Representative that details for each of
those periods (and cumulatively to date for each Measurement Period) the
calculation of Gross Margin, Gross Profit, Gross Revenue and Cost of Services
(collectively, the “Earn Out Accounting”).  Purchaser will pay all reasonable expenses in
connection with the preparation of the Earn Out Accounting and determination of
the Earn Out Payment under this Section 3.3.3.


 


3.3.4                        Subject to
the Earn Out Maximum, any Earn Out Payments (or portion thereof) earned
pursuant to the terms of this Section 3.3 will be accompanied by the
applicable Earn Out Accounting and will be paid in cash by Purchaser to the
Partnership in accordance with written payment instructions received by
Purchaser from the Partnership no later than ten (10) days before the Earn
Out Payment is due (the “Delivery Instructions”).  The Delivery Instructions will specify the
address to which a check for such amount will be sent (or appropriate account
and other information for purposes of delivery of such amount by wire transfer
of immediately available funds).


 


3.4                               Additional
Earnout Payment.  If ***, then Purchaser
will deliver an additional one-time payment (the “Additional
Earnout Payment”) to the Partnership on December 1, 2010,
pursuant to Delivery Instructions provided to Purchaser in accordance with Section 3.3.4.  The amount of the Additional Earnout Payment
will be determined at the end of the Earn Out Period as follows:  If ***, the Additional Earnout Payment will
be One Million Dollars ($1,000,000), and if ***, the Additional Earnout Payment
will be One Million Five Hundred Thousand Dollars ($1,500,000).


 


3.5                               Operational
Impact on Earn Out Payments and Additional Earnout Payment. ***


 


3.6                               Accounts
Receivable.  Schedule 3.6
sets forth an accurate breakdown and aging of all Accounts Receivable,
including (i) a complete itemization of all related invoices that have
been billed as of August 31, 2005; and (ii) a complete itemization of
all work in process that was performed but unbilled as of August 31,
2005.  In order to also capture (x) all
invoices that have been billed as of the Closing Date, and (y) all work in
process that was performed between August 31, 2005 and the Closing Date,
the Partnership will provide Purchaser, at the Partnership’s expense, with an
updated Schedule 3.6, revised effective as of the Closing Date, not
later than the thirtieth (30th) day following the Closing Date.  The Neilson Directors may devote a reasonable
amount of time not inconsistent with their obligations as full-time employees
of Purchaser to compile the updated Schedule 3.6, and to collect
the Accounts Receivable.  Any amount of
the Accounts Receivable collected by Purchaser will be remitted to the
Partnership reasonably promptly following the recognition of collection.  Discounts or upward adjustments that are to
be applied retroactively on invoices for work in process as of the


 


14





















 


Closing Date will
be allocated between the Partnership and Purchaser as mutually agreed by the
Partnership and Purchaser.


 


4                                         Covenant
Not To Compete.


 


4.1                               Covenant
Not to Compete.


 


4.1.1        In
consideration for the Purchase Price to be paid by Purchaser under Section 3
hereof, each Partner agrees that during the Partner Restrictive Period
applicable to him;


 


(a)                                  he
will not, directly or indirectly, within the Territory, engage in, or have any
interest in any Person (whether as a securityholder, creditor or otherwise)
that engages in, any Restricted Activities; and


 


(b)                                 he
will not: (i) solicit from any Person any business involving Restricted
Activities, (ii) cause, induce, or attempt to cause or induce any client
or other business relation of Purchaser to cease doing business with Purchaser
or to deal with any competitor of Purchaser or take any action with respect to
any such client or other business relation that could reasonably be expected to
interfere with its relationship with Purchaser, in each case in connection with
the Restricted Activities, or (iii) cause, induce or attempt to cause or
induce any client or other business relation of a Seller Entity on the Closing
Date or within the year preceding the Closing Date to cease doing business with
Purchaser or to deal with any competitor of Purchaser or take any action with
respect to any such client or other business relation that could reasonably be
expected to interfere with its relationship with Purchaser, in each case in
connection with the Restricted Activities.


 


The Partners acknowledge that the provisions of this Section 4.1.1
are reasonable and necessary to protect and preserve Purchaser’s legitimate
business interests and the value of the Purchased Assets and to prevent any
unfair advantage being conferred on the Partners.  Notwithstanding anything to the contrary
contained herein, a Partner may own up to 1% of the capital stock of any entity
engaged in any Restricted Activities that is publicly traded, provided that
such Partner does not control, directly or indirectly, through one or more
entities or groups (whether formal or informal), the voting or disposition of
greater than 1% of the aggregate beneficial ownership interest of any such
entity.


 


4.1.2        In
consideration for the Purchase Price to be paid by Purchaser under Section 3
hereof, the Partnership agrees that during the Partnership Restrictive Period:


 


(a)                                  it
will not, directly or indirectly, within the Territory, engage in or have any
interest in any Person (whether as a securityholder, creditor or otherwise)
that engages in any Restricted Activities; and


 


(b)                                 it
will not: (i) solicit from any Person any business involving Restricted
Activities, (ii) cause, induce, or attempt to cause or induce any client


 


15





















 


or other business
relation of Purchaser to cease doing business with Purchaser or to deal with
any competitor of Purchaser or take any action with respect to any such client
or other business relation that could reasonably be expected to interfere with
its relationship with Purchaser, in each case in connection with the Restricted
Activities, or (iii) cause, induce or attempt to cause or induce any
client or other business relation of a Seller Entity on the Closing Date or
within the year preceding the Closing Date to cease doing business with
Purchaser or to deal with any competitor of Purchaser or take any action with
respect to any such client or other business relation that could reasonably be
expected to interfere with its relationship with Purchaser, in each case in
connection with the Restricted Activities.


 


The Partnership acknowledges that the provisions of
this Section 4.1.2 are reasonable and necessary to protect and preserve
Purchaser’s legitimate business interests and the value of the Purchased Assets
and to prevent any unfair advantage being conferred on the Partnership.  Notwithstanding anything to the contrary
contained herein, the Partnership may own up to 1% of the capital stock of any
entity engaged in any Restricted Activities that is publicly traded, provided
that the Partnership does not control, directly or indirectly, through one or
more entities or groups (whether formal or informal), the voting or disposition
of greater than 1% of the aggregate beneficial ownership interest of any such
entity.


 


4.2                               Non-Solicitation.


 


4.2.1                        Each
Partner will not, directly or indirectly, during the period commencing on the
Closing Date and ending on the second anniversary of the termination of such
Partner’s employment with Purchaser, solicit, hire, retain or attempt to hire
or retain any Partner, any of the Hired Employees or any other employee or
independent contractor of Purchaser or Parent. 
The foregoing shall not operate to prevent any Partner, upon termination
of such Partner’s employment with Purchaser, from making a professional
announcement of the termination of his relationship with Purchaser.  The Partners acknowledge that this Section 4.2.1
is reasonable and necessary to protect and preserve Purchaser’s legitimate
business interests and the value of the Purchased Assets and to prevent any
unfair advantage being conferred on the Partners.


 


4.2.2                        The
Partnership will not, directly or indirectly, during the period commencing on
the Closing Date and ending on the second anniversary of the expiration of the
Earn Out Period, solicit, hire, retain or attempt to hire or retain any
Partner, any of the Hired Employees or any other employee or independent
contractor of Purchaser or Parent.  The
Partnership acknowledges that this Section 4.2.2 is reasonable and
necessary to protect and preserve Purchaser’s legitimate business interests and
the value of the Purchased Assets and to prevent any unfair advantage being
conferred on the Partnership.


 


4.3                               Separate
Covenants.  The covenants
contained in Sections 4.1 and 4.2 are a series of separate covenants for each
state and each country in the Territory. 
Except for geographic coverage, each separate covenant will be considered
identical in terms to the covenant contained in Section 4.1 and Section 4.2
respectively.  If, in any judicial
proceeding, a court refuses to enforce any of the separate covenants, the
unenforceable


 


16





















 


covenant or
covenants will be eliminated from this Section 4 for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.


 


5                                         Transfer
Of Employees And Employee Benefits.


 


5.1                               Workers’
Compensation.  Without limiting
the scope of Excluded Liabilities under Section 2.4 hereof, the
Partnership will be responsible for any workers’ compensation claims based on
injuries initially occurring prior to the Closing Date regardless of the date
on which the claim was filed and for subsequent re-injuries if a claim for the
initial injury was made prior to the Closing Date.  The Partnership will indemnify and hold
Purchaser harmless against any and all losses, damages, costs and expenses
(including, without limitation, reasonable attorneys’ fees and related
expenses) arising out of or relating to all such claims in accordance with Section 15.1
hereof.  All workers’ compensation claims
currently filed against the Partnership are listed on Schedule 5.1.


 


5.2                               Transfer
of Employees.  In addition to the
employment of the Partners pursuant to the Director Agreements, as a condition
of the Closing, Purchaser will have the right, but not the obligation, to offer
employment to other employees and independent contractors of the Partnership
with titles, responsibilities, compensation and benefits comparable to those
currently provided by the Partnership to each such employee or independent
contractor; provided, however, that Purchaser will have no continuing
obligation as of the Closing Date to continue the employment of any employee or
to maintain the compensation of any employee at any particular level.  Those employees hired by Purchaser will be
referred to herein as the “Hired Employees.”  Purchaser will provide the Partnership with a
list of the Hired Employees no later than ten (10) days before the
Closing.  On the Closing Date, the
Partnership will terminate all of the Hired Employees and will ensure full and
final payment to such Hired Employees of all salary, commissions, accrued
bonuses, any severance payments and benefits (including accrued vacation and
personal time off) payable as of the close of business on the day preceding the
Closing Date.  The Partnership and
Purchaser will cooperate to transition the Hired Employees to Purchaser’s
benefit programs so as to minimize (to the extent reasonably possible) the loss
of benefits of the Hired Employees.  The
Partnership is solely responsible for any liability which may arise under the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2102 et
seq (the “WARN Act”) as a result of any
acts or omissions of the Partnership prior to the Closing Date, or the
transactions contemplated by this Agreement, and will indemnify, defend and
hold Purchaser and Parent harmless from and against any and all such
liabilities in accordance with Section 15.1 hereof.


 


5.3                               Employee
Benefit Plans.  The parties
hereto agree that Purchaser will not have any liability or obligation to
continue or to make any contribution or payment with respect to any Employee
Benefit Plan identified in Schedule 7.12.  The Partnership will indemnify and hold
Purchaser harmless against any and all losses, damages, costs and expenses
(including, without limitation, reasonable attorneys’ fees and related expenses)
arising out of or relating to any Employee Benefit Plan of the Partnership in
accordance


 


17





















 


with Section 15.1
hereof.  The Hired Employees will be
entitled to participate in the employee benefit plans offered by Purchaser
generally to its employees at equivalent levels of responsibility.  In determining the employee benefit plans of
Purchaser in which the Hired Employees are entitled to participate and at what
level, such employees will be given full credit for the time they have been
employed by the Partnership.


 


6                                         The
Closing.


 


6.1                               The
Closing.  The “Closing” means the time at which the
Partnership will effect the sale and transfer of the Purchased Assets in
exchange for the Purchase Price to be delivered by Purchaser pursuant to Section 3
hereof.  The Closing will occur after the
conditions set forth in Sections 12 and 13 have been satisfied or waived on a
date to be mutually determined by Purchaser and the Partnership, at the offices
of Folger Levin & Kahn, LLP, 1900 Avenue of the Stars, Suite 2800,
Los Angeles, California 90067, or at such other place as the parties may
mutually agree.  The “Closing Date” will be the date on
which the Closing occurs, which is currently expected to be November 1,
2005.  The Closing will be effective for
all purposes under this Agreement as of 12:01 a.m. local time on the
Closing Date (the “Effective Time”).


 


6.2                               Seller
Entity Deliveries at Closing. 
Subject to fulfillment or waiver of the conditions set forth in Section 12,
at the Closing the Seller Entities, as applicable, will execute and/or deliver
to Purchaser all of the following:


 


6.2.1                        A
Certificate of the Partnership dated the Closing Date, in form and substance
reasonably satisfactory to Purchaser (i) attaching a true and correct copy
of an action of the Partners authorizing the execution and performance of this
Agreement and the other Transaction Documents to which the Partnership is a
party, and the transactions contemplated hereby and thereby; and (ii) containing
incumbency certificates for the individuals authorized to execute this
Agreement and all related agreements on behalf of the Partnership and
authorized to give instructions and directions on the Partnership’s behalf;


 


6.2.2                        A Bill of
Sale in substantially the form attached hereto as Exhibit D hereto,
duly executed by the Partnership;


 


6.2.3                        The
Assignment and Assumption Agreement, duly executed by the Partnership;


 


6.2.4                        An opinion
of counsel to the Seller Entities in substantially the form attached hereto as Exhibit E;


 


6.2.5                        The
closing certificate contemplated by Section 12 hereof;


 


6.2.6                        An
Assignment of Sublease in substantially the form attached hereto as Exhibit F-1
(the “Los Angeles Sublease Assignment”)
together with a consent to such assignment from Pachulski, Stang, Ziehl, Young,
Jones & Weintraub PC as sub-landlord under the Los Angeles Sublease;


 


18





















 


6.2.7                        An
Assignment of Lease in substantially the form attached hereto as Exhibit F-2
(the “Salt Lake City Lease Assignment”)
together with a consent to such assignment from Phoenix Home Life Mutual
Insurance Company as landlord under the Salt Lake City Lease;


 


6.2.8                        An
Assignment of Lease in substantially the form attached hereto as Exhibit F-3
(the “Wilmington Lease Assignment”)
together with a consent to such assignment from Wilmington Center LLC as
landlord under the Wilmington Lease;


 


6.2.9                        The
Estoppel Certificate, duly executed by Pachulski, Stang, Ziehl, Young, Jones &
Weintraub PC.


 


6.2.10                  The Director
Agreements, each duly executed by the applicable Partner; and


 


6.2.11                  All other such
executed endorsements, assignments and other instruments of transfer and
conveyance consistent with the terms of this Agreement and as may reasonably be
requested by Purchaser, in form and substance reasonably satisfactory to
counsel for Purchaser, to effectively vest in Purchaser all of the right, title
and interest of the Partnership in the Purchased Assets, free and clear of all
Liens (other than Permitted Liens) including, without limitation, releases of
the Purchased Assets from any lending arrangements and any related bank
consents.


 


6.3                               Purchaser
Deliveries at Closing.  Subject
to fulfillment or waiver of the conditions set forth in Section 13, at the
Closing Purchaser will execute and/or deliver (or cause Parent to deliver) to
the Partnership all of the following:


 


6.3.1                        The cash
portion of the Purchase Price as provided in Section 3 by wire transfer of
immediately available funds to the account designated by the Partnership in
advance of the Closing Date as provided in Section 3.1.1;


 


6.3.2                        An Officer’s
Certificate of Parent, dated the Closing Date, in form and substance reasonably
satisfactory to the Partnership (i) attaching a true and correct copy of
an action of Parent, acting on its own behalf and in its capacity as the sole
member and manager of Purchaser, authorizing the execution and performance of
this Agreement and the other Transaction Documents by Parent and by Purchaser,
and the transactions contemplated hereby and thereby; and (ii) containing
incumbency certificates for the individuals authorized to execute this
Agreement and all related agreements on behalf of Purchaser and Parent;


 


6.3.3                        The
Assignment and Assumption Agreement, duly executed by Purchaser;


 


6.3.4                        The Los
Angeles Sublease Assignment, duly executed by Purchaser;


 


6.3.5                        The Salt
Lake City Lease Assignment, duly executed by Purchaser;


 


19





















 


6.3.6                        The
Wilmington Lease Assignment, duly executed by Purchaser; and


 


6.3.7                        The
Director Agreements, duly executed by Purchaser.


 


7                                         Representation
and Warranties of Seller Entities.


 


As an inducement to Purchaser to enter into this
Agreement and to consummate the transactions contemplated in this Agreement,
the Seller Entities jointly and severally represent and warrant to Purchaser
and agree as follows:


 


7.1                               Organization
and Valid Existence.  The
Partnership is a duly formed limited liability partnership and is existing in
good standing under the laws of the State of Utah.  The Partnership has the limited liability
partnership power and authority to enter into the Transaction Documents.  The Partnership has all requisite limited
liability partnership power and authority to own and operate its properties and
assets, to enter into and perform this Agreement and the other Transaction
Documents, and to carry on the Business as currently conducted.  Notwithstanding the foregoing, the
Partnership is currently licensed to practice accounting only in the states of
Utah and California.  The Partnership is
duly qualified to do business as a foreign limited liability partnership in all
jurisdictions wherein the character of the property owned or leased or the
nature of the activities conducted by it makes such qualification necessary,
except where the failure to so qualify could not reasonably be expected to have
a Material Adverse Effect.


 


7.2                               Partnership
Authority.  The Transaction
Documents have been duly authorized by all necessary limited liability
partnership action on the part of the Partnership and have been duly executed
and delivered by the Partnership.  The
execution and delivery of this Agreement and the other Transaction Documents by
the Partnership and the consummation by the Partnership of the transactions
contemplated hereby and thereby have been duly authorized by the Partnership
and the Partners and no other membership consents or approvals are
required.  This Agreement and the other
Transaction Documents constitute the valid and legally binding obligations of
the Partnership enforceable against the Partnership in accordance with their
respective terms, except as may be limited by the Enforceability Limitations.


 


7.3                               No
Violations.  Neither the
execution and delivery of this Agreement or the other Transaction Documents,
the consummation of any of the transactions contemplated hereby or thereby, nor
the fulfillment of any of the terms hereof, except to the extent disclosed
herein or in any Schedule hereto, (i) will violate or conflict with
the Certificate of Limited Liability Partnership or the Limited Liability
Partnership Agreement of the Partnership or any other agreement among the
Partners, (ii) will result in any Material breach of or any Material
default (including events of acceleration, termination or cancellation or loss
of rights) under any provision of any Contract, or (iii) will result in a
Material violation of any statutes, laws, ordinances, rules, regulations or
requirements of Governmental Bodies having jurisdiction over the Business or
the Partnership.


 


20





















 


7.4                               Financial
Statements.  The Partnership has
delivered to Purchaser the Partnership’s financial statements for the 2001,
2002, 2003 and 2004 fiscal years and additional information regarding revenue
and compensation for those years (collectively, the “Year-End
Financial Statements”). 
The Year-End Financial Statements present fairly the financial condition
of the Partnership and the results of the Partnership’s operations for the
periods indicated.  The Partnership has
also delivered to Purchaser compiled balance sheets and the statements of
income of the Partnership for the six (6)-month period ended June 30, 2005
(the “Interim Financial Statement Date”)
(such statement to be referred to as the “Interim Financial
Statement”).  The Interim
Financial Statement presents fairly the financial condition of the Partnership
as of the Interim Financial Statement Date, and the results of its operations
for the six (6) month period ended on the Interim Financial Statement Date
on a basis consistent with that of preceding periods; provided, however, that
the Interim Financial Statement (i) is subject to normal year-end
adjustments and (ii) lacks notes and other financial statement
presentation items.  The Year-End
Financial Statements and the Interim Financial Statement are sometimes
collectively referred to herein as the “Financial Statements.”  The Financial Statements are collectively
attached hereto as Exhibit G.


 


7.5                               Absence
of Certain Changes.  Except (i) as
disclosed in the Financial Statements or in any Schedule delivered
pursuant hereto; (ii) for the execution and delivery of this Agreement and
any applicable Transaction Document; and (iii) as set forth in Schedule 7.5,
the Partnership has not since the Interim Financial Statement Date:


 


7.5.1                        Had any
Material Adverse Change, other than changes in the ordinary course of business
consistent with past practice;


 


7.5.2                        Suffered
any damage, destruction or loss of physical property (whether or not covered by
insurance) that could reasonably be expected to have a Material Adverse Effect;


 


7.5.3                        Sold,
transferred or otherwise disposed of, or agreed to sell, transfer or otherwise
dispose of, any assets having a fair market value at the time of sale, transfer
or disposition of $2,000 or more in the aggregate, other than in the ordinary
course of business and consistent with past practice;


 


7.5.4                        Increased,
or agreed to increase, the compensation or bonuses or special compensation of
any kind of any Hired Employee over the rate being paid to them on the Interim
Financial Statement Date, other than the increases generally granted to
employees effective as of September 1, 2005, and merit, incentive, and/or
cost-of-living increases made in the ordinary course of business consistent
with past practices of the Partnership, and no such increases are required by
written agreement or, to the Knowledge of the Partnership, oral understanding;
or adopted or increased any benefit under any insurance, pension or other employee
benefit plan, program or arrangement made to, for, or with any such Hired
Employee;


 


7.5.5                        Had any
strike or work stoppage;


 


21





















 


7.5.6                        Other than
changes in presentation, made any change from its historical accounting methods
or practices with respect to its Business or the Purchased Assets; or


 


7.5.7                        Entered
into any Material transaction not in the ordinary course of its Business
consistent with past practice.


 


7.6                               Title
to and Condition of Purchased Assets. 
The Partnership has good and valid title to, or valid leasehold
interest, licensee or use rights in, all of the Purchased Assets, free and
clear of any mortgage, pledge, conditional sales contract, lien, security interest,
right of possession in favor of any third party, claim or encumbrance
(collectively “Liens”), except for the
Permitted Liens.


 


7.7                               Real
Estate.  The conduct of the
Business in any premises occupied by the Partnership is not in violation of any
law, statute, ordinance, rule or regulation of any Governmental Body in
any respect (including, without limitation, those concerned with environmental
or occupational safety standards), which violations would have a Material
Adverse Effect.


 


7.8                               Contracts.  Schedule 7.8 contains a complete
list (and, in the case of oral agreements, contracts or leases, a summary of
the material terms) of all contracts, equipment leases, work orders, client
engagement letters, retainer letters, fee agreements and other agreements or
arrangements that are Material to the Business or to which the Purchased Assets
may be subject (the “Contracts”).  In the case of client engagement letters,
retainer letters and fee agreements, all such client agreements are listed on Schedule 7.8,
regardless of whether they are Material. 
To the Knowledge of the Partnership, the Contracts are valid, binding
and enforceable by the Partnership in accordance with their respective terms
and are in full force and effect, except as may be limited by the
Enforceability Limitations.  The Partnership
has delivered to Purchaser true and complete copies of the Contracts listed in Schedule 7.8
and all amendments thereto, other than those oral agreements summarized on Schedule 7.8.  The Partnership has complied in all Material
respects with all of the Contracts and is not in Material default under any of
the Contracts.  To the Knowledge of the
Partnership, no other party is in default in the observance or the performance
of any Material term or obligation to be performed by it under any Contract
listed in Schedule 7.8.


 


7.9                               Litigation.  Except as described on Schedule 7.9,
there is no litigation, proceeding (arbitral or otherwise), claim or
investigation of any nature pending or, to the Knowledge of the Partnership,
threatened against the Partnership relating to either the Business or the
Purchased Assets.  Except as described on
Schedule 7.9, there are no writs, injunctions, decrees, arbitration
decisions, unsatisfied judgments or similar orders outstanding against the
Partnership relating to either the Business or the Purchased Assets.


 


22





















 


7.10                        Intellectual
Property.


 


7.10.1                  Schedule 7.10
contains a true and complete list of the IP Assets.  The Partnership has delivered to Purchaser
copies of all documents (if any) establishing the Partnership’s ownership of or
rights to use the IP Assets.


 


7.10.2                  The Partnership
owns, or uses pursuant to valid licenses, all IP Assets.  Without limiting the foregoing, the
Partnership has a sufficient number of licenses for the Third Person Licenses
for each of the Partnership’s current employees, independent contractors and/or
items of equipment listed in Schedule 2.1.1.


 


7.10.3                  There are no
third Person claims or demands pending or to the knowledge of the Partnership,
threatened orally or in writing, before any Governmental Body or court, against
any Seller Entity that any of the IP Assets infringes any copyright, patent,
trademark, service mark trade name, trade secret, license, application or other
proprietary right or intellectual property of any other Person, or makes
unauthorized use of any secret process, formula, method, information, know-how,
or any other proprietary confidential information, including, without
limitation, any software or software documentation of any other Person.


 


7.10.4                  The Partnership’s
rights in and to the IP Assets are freely assignable, including the right to
create derivative works, and the Partnership is not under any obligation to pay
any royalty or other compensation to any third Person or to obtain approval or
consent for use of licensing any of the IP Assets.  All of the interests of the Partnership in
the IP Assets are free and clear of all Liens, other than Permitted Liens, and
are not currently being challenged or infringed in any way or involved in any
pending legal or administrative proceeding before any Governmental Body or
court.  Except for licenses to clients in
the ordinary course of business or as otherwise disclosed in Schedule 7.10,
no current licenses or other rights for the use of the IP Assets have been
granted by the Partnership to any third Persons, the Partnership has no
obligation to grant any such licenses or rights, and none of the IP Assets are
being used by any other Person.


 


7.10.5                  No employee or
independent contractor of the Partnership has any valid claim or right to any
of the IP Assets.  No employee or, to the
Knowledge of the Partnership, independent contractor, of the Partnership is a
party to or otherwise bound by any agreement with or obligated to any other Person
(including any former employer) which in any respect conflicts with any
obligation, commitment or job responsibility to which he or she is a party or
otherwise.


 


7.10.6                  The Partnership
does not make any representation and warranty regarding the performance or
functionality of any third Person software or technology licensed to the
Partnership pursuant to the Third Person Licenses or regarding the performance,
functionality or transferability of those items of Intellectual Property Rights
that are standard, “off-the-shelf” items that the Partnership uses for word
processing, accounting, database management, programming languages, development
tools, office management, or similar functions.


 


23





















 


7.11                        Compliance
with Laws.  Except to the extent
otherwise specifically referred to herein, the Partnership has complied with
and is in compliance with all federal, state, local and foreign statutes, laws,
ordinances, regulations, rules, permits, judgments, orders or decrees
applicable to the Partnership, the Business and the Purchased Assets, except
where the failure to comply will not have a Material Adverse Effect.


 


7.12                        Employee
Benefit Plans.  Schedule 7.12
contains a true and complete list of all Employee Benefit Plans maintained by
the Partnership.  There has been no
failure by such Employee Benefit Plans to comply with any applicable laws
relating to labor and employee benefits, including, without limitation, any
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, for which such failure Purchaser would be liable
in any Material amount.


 


7.13                        Taxes.  Except as otherwise indicated in Schedule 7.13,
there are no Tax liens on any of the Purchased Assets.  The Seller Entities have paid all Taxes that
are due from them with respect to the Business and the Purchased Assets and
have duly filed all Tax returns and reports required to be filed by them.  The Partnership has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor or other
Person.  No transaction contemplated by
this Agreement is subject to withholding under Section 1445 of the
Code.  The Partnership has not at any
time during the Partnership’s existence owned any subsidiaries.


 


7.14                        Insurance.  Schedule 7.14 contains a complete
description of all material policies of fire, liability, workmen’s
compensation, directors and officers, errors and omissions and other forms of
insurance owned or held by the Partnership. 
Except for the Errors and Omissions Tail Policy, all such policies will
remain in full force and effect up to and inclusive of the Closing Date.  The Partnership has provided Purchaser with a
true and complete copy of the Errors and Omissions Tail Policy.


 


7.15                        Employees;
Employment Matters.


 


7.15.1                  The Partnership
has no unsatisfied liability to any previously terminated employee or
independent contractor.  The Partnership
has disclosed all written employee handbooks, policies, programs and
arrangements to Purchaser.


 


7.15.2                  Except as otherwise
indicated in Schedule 7.15, no key employee or independent
contractor or group of employees or independent contractors has informed the
Partnership of any plans to terminate their employment with the Partnership for
any reason, including as a result of the transactions contemplated by this
Agreement.


 


7.15.3                  Other than the
Partners whose employment is reflected in the Partnership Agreement, all
persons employed by the Partnership are employees at will.


 


24





















 


7.16                        Brokers.  Neither the Partnership 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.


 


7.17                        Business
Relations.  Except as otherwise
indicated in Schedule 7.17, the Partnership has not received any
written notice or, to the Knowledge of the Partnership, any oral notice that
any client, supplier or vendor engaged in or doing business with the Partnership
will cease to do business (other than due solely to completion of engagements
or assignments commenced prior to the Closing Date) with Purchaser after the
consummation of the transactions contemplated hereby in the same manner and at
the same levels as previously conducted with the Partnership except for any
reductions that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. 
Within the last twelve (12) months, no Seller Entity has received any notice
of cancellation of any Contract or Material business arrangement with any
Person and no Seller Entity has Knowledge of any facts that could lead it to
believe that the Business will be subject to cancellation of any such Contract
or Material business arrangement.  Within
the last twelve (12) months, no Seller Entity has received a written or oral
notice of a Material dispute or problem, or Material dissatisfaction with the
Partnership from any client of the Partnership. 
To the Knowledge of the Partnership, the consummation of the
transactions contemplated by this Agreement will not have a Material Adverse
Effect on any relationships with any clients of the Partnership.


 


7.18                        Warranty;
Nonbillable Work.  All services
rendered by the Partnership have been in Material conformity with all
applicable contractual commitments and all warranties, and the Partnership has
no Material liability for damages in connection therewith.  The Partnership is not obligated to perform
nonbillable client service work under the terms of any Contract in order to
correct work previously performed that was incorrect or deficient, to complete
work in excess of the fixed rate limit with respect to a particular project or
otherwise, other than reasonable and customary efforts to maintain client
satisfaction consistent with the size and scope of a particular project and
consistent with maintaining the profitability of such project.  Services provided as a trustee of a
bankruptcy estate or to the trustee of a bankruptcy estate or directly to the
estate, may be subject to statutory limitations, agreements regarding flat fee
services, or the oversight and approval of the bankruptcy court.


 


7.19                        Consents.  The execution, delivery and performance of
this Agreement and all ancillary agreements, documents, instruments and
schedules executed in connection herewith by the Partnership do not require the
consent, approval authorization or act of, or the making by the Partnership of
any declaration, filing or registration with, any Governmental Body or any
other Person that applies to or binds the Partnership that has not been
obtained or made or that will not have been obtained or made as of the Closing
Date.


 


7.20                        Schedules.  Any information set forth in or attached to
any Schedule delivered or required to be delivered pursuant to this
Agreement will be deemed to constitute disclosure for any other Schedule delivered
or to be delivered pursuant to this Agreement.


 


25





















 


7.21                        1933
Act Matters.  The Partnership and
each Partner who receives any Parent Stock from the Partnership (the
Partnership and such Partners each, a “Distributee”),
will acquire the shares of Parent Stock to be acquired pursuant to this
Agreement either (i) for investment for such Distributee’s own account and
not with a view to or for offer or sale in connection with any distribution
thereof, or (ii) for resale solely pursuant to an effective registration
statement or applicable exemption under Securities Act of 1933, as amended, and
the respective rules and regulations thereunder (the “1933
Act”).  Each Distributee
understands that the shares of Parent Stock to be acquired pursuant to this
Agreement will not have been registered under the 1933 Act with respect to such
transaction by reason of a specific exemption or exception from the
registration requirements of the 1933 Act which depend upon, among other
things, the accuracy of such Distributee’s representations herein.  Each Distributee understands that, until such
time as a registration statement for the resale of such shares of Parent Stock
is effective, each certificate evidencing such shares will bear a legend
substantially to the effect that the shares represented by such certificate
have not been registered or qualified under the 1933 Act or the securities or
blue sky laws of any state and may be offered and sold only if registered and
qualified pursuant to the relevant provisions of the 1933 Act and applicable
state securities or blue sky laws or upon delivery to Parent of an opinion of
counsel that an exemption from such registration or qualification is
applicable.


 


7.22                        Information,
Experience, and Ability to Bear Risk. 
Each Distributee acknowledges receipt of all the information requested
from Parent by such Distributee and considered by such Distributee to be
necessary or appropriate for deciding whether to acquire the shares of Parent
Stock to be acquired pursuant to this Agreement, including, without limitation,
the Parent SEC Reports (as defined in Section 9.6).  Each Distributee is an “accredited investor”
within the meaning of Rule 501(a) under the 1933 Act and has such
knowledge and experience in financial and business matters that such
Distributee is capable of evaluating the merits and risks of, and such
Distributee is able to bear the economic risk of, its acquisition of such
shares of Parent Stock pursuant to this Agreement.  Each Distributee has had the opportunity to
ask questions and receive answers regarding the terms and conditions of such
acquisition of shares of Parent Stock.


 


7.23                        Accuracy
of Disclosure.  No representation
or warranty made by a Seller Entity in this Section 7, and no exhibit,
certificate, schedule, list or instrument prepared, made or delivered, or to be
prepared, made or delivered, by or on behalf of a Seller Entity pursuant hereto
contains or will contain any untrue statement of a Material fact or omits or
will omit to state a Material fact necessary to make the statements contained
herein and therein not misleading.


 


7.24                        No
Other Warranties or Representations. 
SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SECTION 7,
(I) NO SELLER ENTITY MAKES ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER,
EXPRESS OR IMPLIED, CONCERNING THE PURCHASED ASSETS, INCLUDING, WITHOUT LIMITATION,
ANY REPRESENTATION OR WARRANTY AS TO VALUE, QUANTITY, QUALITY, CONDITION,
MERCHANTABILITY, SUITABILITY FOR USE, SALABILITY, OBSOLESCENCE, WORKING ORDER,
VALIDITY OR ENFORCEABILITY, AND


 


26





















 


(II) PURCHASER AND PARENT SPECIFICALLY ACKNOWLEDGE
THAT NO WARRANTIES THAT ANY OF THE PURCHASED ASSETS ARE MERCHANTABLE OR FIT FOR
ANY PARTICULAR PURPOSE ARE MADE OR SHOULD BE IMPLIED.


 


8                                         Representations
and Warranties of the Partners.


 


As an inducement to Purchaser to enter into this
Agreement and to consummate the transactions contemplated in this Agreement,
and in addition to the representations and warranties made under Section 7,
each Partner severally and jointly represents and warrants to Purchaser and
agrees as follows:


 


8.1                               Ownership
of Partnership Equity.  Each
Partner owns, beneficially or of record, the equity interests of the
Partnership shown opposite such Partner’s name on Schedule 3.1.2.


 


8.2                               Authority
of Partners.  Each Partner has
the requisite power and authority to execute and deliver this Agreement and the
Transaction Documents to which he is a party, and to consummate the
transactions contemplated hereby and thereby to be consummated by such
Partner.  This Agreement has been duly
and validly executed and delivered by such Partner.  This Agreement and all other agreements and
written obligations entered into or undertaken in connection with the
transactions contemplated hereby constitute the valid and legally binding
obligations of such Partner, enforceable against such Partner in accordance
with their respective terms, except as may be limited by the Enforceability
Limitations.


 


8.3                               Consents.  The execution, delivery and performance of
this Agreement, the Director Agreement and all other Transaction Documents
executed by such Partner do not require the consent, approval, authorization or
act of, or the making by such Partner of any declaration, filing or
registration with, any Governmental Body or any other Person, including such
Partner’s spouse, if applicable, that applies to or binds such Partner that has
not been obtained or made or that will not have been obtained or made as of the
Closing Date.


 


8.4                               No
Other Warranties or Representations. 
SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SECTION 8,
(I) NO PARTNER MAKES ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR
IMPLIED, CONCERNING THE PURCHASED ASSETS, INCLUDING, WITHOUT LIMITATION, ANY
REPRESENTATION OR WARRANTY AS TO VALUE, QUANTITY, QUALITY, CONDITION, MERCHANTABILITY,
SUITABILITY FOR USE, SALABILITY, OBSOLESCENCE, WORKING ORDER, VALIDITY OR
ENFORCEABILITY, AND (II) PURCHASER AND PARENT SPECIFICALLY ACKNOWLEDGE THAT NO
WARRANTIES THAT ANY OF THE PURCHASED ASSETS ARE MERCHANTABLE OR FIT FOR ANY
PARTICULAR PURPOSE ARE MADE OR SHOULD BE IMPLIED.


 


27





















 


9                                         Representations
of Purchaser and Parent.


 


As an inducement to the Seller Entities to enter into
this Agreement and to consummate the transactions contemplated in this Agreement,
Purchaser and Parent jointly and severally represent and warrant to the Seller
Entities and agree as follows:


 


9.1                               Organization
and Authority.  Purchaser is a
duly formed limited liability company and is existing in good standing under
the laws of the State of California. 
Purchaser has all requisite limited liability company power and
authority to own and operate its properties and assets and to carry on its
business as currently conducted. 
Purchaser has the limited liability company power to execute, deliver
and perform this Agreement.  This
Agreement has been duly authorized by all necessary limited liability company
action on the part of Purchaser.  Parent
is a corporation duly organized and existing in good standing under the laws of
the State of Delaware, is qualified to do business in California, and has the
requisite corporate power and authority to own its properties and assets and to
carry on its business as now conducted. 
Each of Purchaser and Parent is duly qualified to do business as a
foreign limited liability company or corporation, as applicable, in all
jurisdictions wherein the character of the property owned or leased or the
nature of the activities conducted by it makes such qualification necessary.


 


9.2                               Authorization
of Agreement.  Purchaser and
Parent have the requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement
by Purchaser and Parent and the consummation by Purchaser and Parent of all
obligations contemplated hereby have been duly authorized by all requisite
limited liability company action on the part of Purchaser, and by all requisite
corporate action on the part of Parent. 
This Agreement and all other agreements and written obligations entered
into or undertaken in connection with the transactions contemplated hereby
constitute the valid and legally binding obligations of Purchaser and Parent,
enforceable against such Purchaser and Parent in accordance with their
respective terms, except as may be limited by the Enforceability Limitations.


 


9.3                               No
Violations.  Neither the
execution or delivery of this Agreement, the consummation of any of the
transactions contemplated hereby, nor the fulfillment of any of the terms
hereof, except to the extent disclosed herein or in any Schedule hereto, (i) will
violate or conflict with the Articles of Organization or Operating Agreement of
Purchaser or the Certificate of Incorporation or Bylaws of Parent, (ii) will
result in any Material breach of or any default (including events of
acceleration, termination or cancellation or loss of rights) under any
provision of any contract or agreement to which Purchaser or Parent are parties
or by which Purchaser or Parent are bound, or (iii) will result in a
Material violation of any statutes, laws, ordinances, rules, regulations or
requirements of Governmental Bodies having jurisdiction over Purchaser or
Parent.


 


9.4                               Capital
Stock.  The shares of Parent
Stock to be issued pursuant to this Agreement, when issued in accordance with
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and free and clear from any Liens in respect


 


28





















 


of the issuance thereof, except as provided in this
Agreement and except for Liens created by or imposed upon the holder of such
shares.  Such shares of Parent Stock will
not be subject to any preemptive rights or other restrictions, except as
provided in this Agreement, or under federal and applicable state securities
laws.  Assuming the representations and
warranties of each Distributee set forth in Sections 7.21 and 7.22 are true and
correct, the shares of Parent Stock to be issued pursuant to this Agreement
will be issued in compliance with applicable federal or state securities laws,
including, without limitation, the Utah Uniform Securities Act, as amended, and
the California Corporate Securities Law of 1968, as amended.


 


9.5                               Litigation;
Compliance with Law.  There is no
litigation, proceeding (arbitral or otherwise), claim or investigation of any
nature, pending, or to Purchaser’s or Parent’s actual knowledge, threatened,
against Purchaser or Parent that could reasonably be expected to have a
Material Adverse Effect on Purchaser’s or Parent’s ability to perform in
accordance with the terms of this Agreement.


 


9.6                               SEC
Filings.  Parent has filed, and
has made available to the Seller Entities, true and complete copies of, all
forms, reports, schedules, statements, and other documents required to be filed
by it under the 1933 Act and the Securities Exchange Act of 1934, as amended,
and the respective rules and regulations thereunder (the “1934 Act”) (such forms, reports,
schedules, statements and other documents are each referred to as a “Parent SEC Report”).


 


9.7                               No
Finder.  Neither Purchaser,
Parent nor any Person acting on 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.


 


9.8                               Consents.  All consents, approvals, authorizations or
acts of, or the making by either Parent or Purchaser of any declaration, filing
or registration with, any Governmental Body or any other Person that apply to
or bind Parent or Purchaser and that are required to be obtained or made as of
the Closing Date in connection with the execution, delivery and performance of
this Agreement and the other Transaction Documents, will have been obtained or
made as of the Closing Date.


 


9.9                               Accuracy
of Disclosure.  No representation
or warranty made by either Parent or Purchaser in this Section 9, and no
exhibit, certificate, schedule, list or instrument prepared, made or delivered,
or to be prepared, made or delivered, by or on behalf of Parent or Purchaser
pursuant hereto contains or will contain any untrue statement of a Material
fact or omits or will omit to state a Material fact necessary to make the
statements contained herein and therein not misleading.


 


10                                  Pre-Closing
Covenants.


 


10.1                        Affirmative
Covenants.  From the date of this
Agreement until the Closing Date, the Seller Entities will, and will cause the
employees of the Partnership, as applicable, to:


 


29





















 


10.1.1                  Conduct the
Business in the ordinary course of business and in compliance with all legal
requirements applicable to the Business;


 


10.1.2                  Pay all of the
liabilities and Taxes of the Business when due, except for liabilities or Taxes
being contested in good faith (which will be paid by the Seller Entities when
due and will not become an Assumed Liability);


 


10.1.3                  Maintain
existing insurance coverages; use all commercially reasonable efforts to (i) preserve
intact all rights of the Business to retain its employees; and (ii) maintain
good relationships with its employees, clients, suppliers, and others having
business dealings with the Business; and


 


10.1.4                  Make a good
faith effort to obtain:


 


(a)                                  The
written consent of Phoenix Home Life Mutual Insurance Company, as landlord
under the Salt Lake City Lease, to the Salt Lake City Assignment to Purchaser;


 


(b)                                 The
written consent of Pachulski, Stang, Ziehl, Young, Jones & Weintraub
PC., as sublandlord under the Los Angeles Sublease, to the Los Angeles Sublease
Assignment, and an estoppel certificate from Pachulski, Stang, Ziehl, Young,
Jones & Weintraub PC., in substantially the form attached hereto as Exhibit H
(the “Estoppel Certificate”); and


 


(c)                                  The
written consent of Wilmington Center LLC, as landlord under the Wilmington
Lease, to the Wilmington Lease Assignment.


 


10.2                        Restrictions
on Conduct of the Business Prior to Closing.  From the date of this Agreement until the
Closing Date, no Seller Entity, with respect to the Business, will, directly or
indirectly, without Purchaser’s prior written consent:


 


10.2.1                  Enter into,
create, incur or assume (i) any borrowings under capital leases or (ii) any
other Material obligations;


 


10.2.2                  Acquire by
merging or consolidating with, or by purchasing any equity securities or assets
of, or by any other manner, any business or any entity;


 


10.2.3                  Sell, transfer,
lease, license or otherwise encumber any of the Purchased Assets or enter into
any agreement, contract, memorandum or understanding regarding such a sale,
transfer, lease or license;


 


10.2.4                  Enter into any
Material contracts or commitments with another Person, other than such
contracts approved in advance by Purchaser or that can be canceled on less than
30 days written notice, provided such approval will not be unreasonably
withheld or delayed; provided further, however, the Partnership
may enter into (a) new client engagements subject to compliance with
Purchaser’s conflict check procedure; and (b) each of the Salt Lake City
Lease Assignment, the Los Angeles Sublease Assignment, and the Wilmington Lease
Assignment;


 


30





















 


10.2.5                  Violate any
legal requirement applicable to the Partnership;


 


10.2.6                  Purchase,
license or otherwise acquire any assets, except for supplies and standard
office equipment acquired in the ordinary course of business;


 


10.2.7                  Change its
credit practices, accounting methods or practices or standards used to maintain
its books, accounts or business records;


 


10.2.8                  Incur or become
subject to any liability, contingent or otherwise, except current liabilities
in the ordinary course of business;


 


10.2.9                  Enter into an
agreement, contract, memorandum or understanding for the sale of all or any
part of the partnership interests of the Partnership without the prior written
consent of Purchaser, which consent may be granted or withheld by Purchaser in
its sole discretion;


 


10.2.10            Fail to maintain the
Purchased Assets in their existing order and condition, reasonable wear and
tear excepted; or


 


10.2.11            Agree, in writing or
otherwise, to take any of the actions proscribed by this Section 10.2, or
any action that would make any of its representations or warranties contained
in this Agreement untrue or incorrect in any Material respect or prevent it
from performing or cause it not to perform its covenants hereunder.


 


10.3                        Certain
Notifications by Seller Entities. 
From the date of this Agreement until the Closing, the Seller Entities,
as applicable, will promptly notify Purchaser in writing regarding any:


 


10.3.1                  Action taken by
the Partnership not in the ordinary course of business and any circumstance or
event that could reasonably be expected to have a Material Adverse Effect;


 


10.3.2                  Fact,
circumstance, event, or action by the Partnership (i) which, if known on
the date of this Agreement, would have been required to be disclosed in or
pursuant to this Agreement; or (ii) the existence, occurrence, or taking
of which would result in any of the representations and warranties of the
Partnership or the Partners contained in this Agreement or in any agreement
entered into in connection herewith not being true and correct when made or at
Closing;


 


10.3.3                  Breach of any
covenant or obligation of the Partnership or any Partner hereunder;


 


10.3.4                  Circumstance or
event which will result in, or could reasonably be expected to result in, the
failure of the Partnership to timely satisfy any of the closing conditions
specified in Section 12 of this Agreement;


 


31





















 


10.3.5                  Actions, suits
or proceedings against or, to the Knowledge of the Seller Entities, threatened
against the Business or the Purchased Assets, in any court, or before any
arbitrator, or before or by any Governmental Body;


 


10.3.6                  Termination or,
to the Knowledge of the Seller Entities, any threatened termination of any
Contract or other right that is necessary for the ownership by Purchaser of any
of the Purchased Assets or the operation by Purchaser following the Closing
Date of any of the Business including, without limitation, any termination or
any written notice, or to the Knowledge of the Seller Entities, any oral notice
of termination of any Material Contract with a client;


 


10.3.7                  Any denial, or
written or, to the Knowledge of the Seller Entities, oral notice of the denial
by any court or client of the assignment by the Partnership to Purchaser of any
Contract or Contracts; and


 


10.3.8                  Notice or other
communication from any third Person alleging that the consent of such third
Person is or may be required in connection with the transactions contemplated
by this Agreement.


 


10.4                        Risk
of Loss.  The risk of any loss,
damage or impairment, confiscation or condemnation of the Purchased Assets or
any part thereof from fire or any other casualty or cause will be borne by the
Partnership at all times prior to the Closing Date.


 


10.5                        Updating
the Seller Entities Disclosure Schedule.  If any event, condition, fact or circumstance
that is required to be disclosed pursuant to Section 7 would require a
change to the disclosure schedules referenced therein if such disclosure
schedules were dated as of the date of the occurrence, existence or discovery
of such event, condition, fact or circumstance, then the Seller Entities will
promptly deliver to Purchaser an update to the applicable disclosure schedule specifying
such change, provided, however, that no such update will be deemed to
supplement or amend the applicable disclosure schedule for the purpose of (a) determining
the accuracy of any of the representations and warranties made by the Seller
Entities in this Agreement or (b) determining whether any of the
conditions set forth in Section 12 have been satisfied.


 


10.6                        Access
to Information.  From the date of
this Agreement until the Closing, the Partnership will (a) permit
Purchaser and its representatives to have reasonable access during regular
business hours, and in a manner so as not to interfere with the normal
operations associated with the Business, to all premises, properties,
personnel, books, records, Contracts, and Documents of or pertaining to the Business;
(b) furnish Purchaser with all financial, operating and other data and
information related to the Business (including copies thereof), as Purchaser
may reasonably request; and (c) otherwise cooperate and assist, to the
extent reasonably requested by Purchaser, with Purchaser’s investigation of the
Business, the Purchased Assets and the Assumed Liabilities.  No information or knowledge obtained in any
investigation pursuant to this Section 10.6 will affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the transactions


 


32





















 


contemplated hereunder.  Any such access by Purchaser will not
materially interfere with the normal operation of the Business.


 


11                                  Affirmative
Covenants.


 


11.1                        Confidentiality.  After the Closing, each of the parties hereto
agrees that it will treat in confidence this Agreement and all documents,
materials and other information that it may have obtained regarding the other
party during the course of the negotiations leading to the preparation of this
Agreement and other related documents. 
If a party (the “Recipient”)
is requested or required (by deposition questions, interrogatories, requests
for information or documents, subpoena, civil investigative demand or similar
process) to disclose the confidential information of another party (the “Protected Party”), the Recipient
must provide the Protected Party with prompt notice of such request(s), except under
the Patriot Act, so the Protected Party may seek an appropriate protective
order or other appropriate remedy and/or waive compliance with the
confidentiality provisions of this Agreement. 
(The preceding sentence will not apply to public disclosures by a
Recipient that the Recipient believes in good faith to be required by federal
securities laws or any listing or trading agreement concerning the Recipient’s
publicly-traded securities, after reasonable advance notice to the Protected
Party.)  In the event that such
protective order or other remedy is not obtained, or the Protected Party grants
a waiver hereunder, the Recipient may furnish that portion (and only that
portion) of the confidential information that 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 will not
apply to any information (i) that is or becomes available to such party
from a source other than the Protected Party, unless the source is bound by a
confidentiality agreement with respect to the information, (ii) that is or
becomes available to the public other than as a result of improper disclosure
by such party or its agents, or (iii) the disclosure of which such party
reasonably deems to be necessary in order to obtain any of the consents or
approvals contemplated hereby, provided such party obtains the prior written
consent of the Protected Party.


 


11.2                        Public
Announcements.  The parties agree
that any press release to be issued in connection with the execution of this
Agreement or the announcement of the consummation of the transactions contemplated
hereunder, will be mutually agreed upon by Purchaser and the Partnership prior
to the issuance thereof.


 


11.3                        Taxes.


 


11.3.1                  The Seller
Entities will be solely liable for and will pay all Taxes (whether assessed or
unassessed) applicable to the Business and the Purchased Assets, in each case
attributable to any period (or portions thereof) ending prior to the Closing
Date, including all income or franchise Taxes arising in connection with the
consummation of the transactions contemplated by this Agreement.  If the Partnership intends to dissolve or be
wound up, the Seller Entities will promptly file any final Tax returns in
connection with such dissolution or winding up. 
Purchaser will be liable for and will pay all Taxes


 


33





















 


(whether assessed or unassessed) applicable to the
Business and the Purchased Assets, in each case attributable to periods (or
portions thereof) beginning on or after the Closing Date.  For purposes of this Section 11.3, any
period beginning before and ending after the Closing Date will be treated as
two partial periods, one ending prior to the Closing Date and the other
beginning on the Closing Date except that Taxes (such as property Taxes)
imposed on a periodic basis will be allocated on a daily basis.


 


11.3.2                  Notwithstanding Section 11.3.1,
any sales Tax, use Tax or similar Tax attributable to the sale or transfer of
the Purchased Assets will be paid by the Partnership.  Purchaser 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.


 


11.3.3                  The Seller
Entities or Purchaser, as the case may be, will provide reimbursement for any
Tax paid by one party all or a portion of which is the responsibility of
another party in accordance with the terms of this Section 11.3.  Within a reasonable time prior to the payment
of any said Tax, the party paying such Tax will give notice to the other
parties 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.


 


11.4                        Further
Assurances.


 


11.4.1                  From and after
the Closing Date, the Seller Entities will take all such steps as may be
necessary to put Purchaser in actual possession and operating control of the
Purchased Assets, and the Seller Entities agree that at any time or from time
to time (without further cost or expense to Purchaser) after the Closing Date,
upon the reasonable request of Purchaser, the Seller Entities will execute,
acknowledge and deliver such other instruments of conveyance and transfer and
take such other action as may be reasonably required to vest in Purchaser good
title to any of the Purchased Assets.


 


11.4.2                  To the extent
the Partnership receives any funds or other assets that are part of the
Purchased Assets (the “Purchaser Funds”)
after the Closing Date, the Partnership will, as soon as practicable, deliver
such Purchaser Funds to Purchaser and will take all steps necessary to vest
title to such funds and assets in Purchaser. 
The Partnership hereby designates Purchaser as its true and lawful
attorney-in-fact, with full power of substitution, to execute or endorse for
the benefit of Purchaser any checks, notes or other documents received by the
Partnership in connection with the Purchaser Funds.  The Partnership hereby acknowledges and
agrees that the power of attorney set forth in the preceding sentence is
coupled with an interest, and further agrees to execute and deliver to
Purchaser from time to time any documents or instruments reasonably requested
by Purchaser to evidence such power of attorney.


 


11.4.3                  Subject to Section 11.4.2,
to the extent Purchaser receives any funds or other assets that are Excluded
Assets (the “Partnership Funds”) after the
Closing Date, Purchaser will, as soon as practicable, deliver such Partnership
Funds to the Partnership and will take all steps necessary to vest title to
such funds and assets in


 


34





















 


the Partnership. 
Purchaser hereby designates the Partnership as its true and lawful
attorney-in-fact, with full power of substitution, to execute or endorse for
the benefit of the Partnership any checks, notes or other documents received by
Purchaser in connection with the Partnership Funds.  Purchaser hereby acknowledges and agrees that
the power of attorney set forth in the preceding sentence is coupled with an
interest, and further agrees to execute and deliver to the Partnership from
time to time any documents or instruments reasonably requested by Purchaser to
evidence such power of attorney.


 


11.4.4                  Within ten (10) days
after the Closing Date, the Partnership will change its name to a name that
does not include the name “Neilson Elggren.” 
After the Closing, Purchaser will maintain the Partnership’s brand
identity, including the use of the name “Neilson Elggren” for so long as
Purchaser believes in its sole discretion that it is commercially productive to
do so; however, as of the Closing Date, the Partnership’s brand will be
associated with Purchaser’s brand in such manner as Purchaser deems reasonably
appropriate.  Purchaser may at its sole
option register “Neilson Elggren” as a fictitious business name and/or as a
division of Purchaser to maintain the Partnership’s brand.


 


11.4.5                  At any time or
from time to time after the Closing, each party hereunder will, at the request
of the other, execute and deliver any further instruments or documents and take
all such further action as any party may reasonably request in order to carry
out the transactions contemplated hereby.


 


11.5                        Retained
Information.  For a period of
three years following the Closing and, with respect to tax related records, for
a period of seven years following the Closing, to the extent not prohibited by
law or restricted by applicable ethical rules, Purchaser will make available to
the Seller Entities any business records related to the operations of the
Partnership prior to the Closing that are transferred to Purchaser at the
Closing (the “Transferred Business Records”)
for inspection and copying to the extent the Seller Entities require access to
such records in response to tax audits or other reasonable business
necessity.  The Partnership’s access to
the Transferred Business Records is subject to the confidentiality obligations
of the Partnership under Section 11.1 hereof.  After the Closing, the Partnership, to the
extent not prohibited by law or restricted by applicable ethical rules, will make
available to Purchaser any business records related to the operations of the
Partnership prior to the Closing that are not transferred to Purchaser at the
Closing (the “Retained Business Records”)
for inspection and copying to the extent Purchaser requires access to such
records for reasonable business necessity. 
Purchaser’s access to the Retained Business Records is subject to the
confidentiality obligations of Purchaser under Section 11.1 hereof.  Notwithstanding the foregoing, Parent and
Purchaser each waive any and all rights, including the right to inspect and
copy, with respect to all of the books, files, documents and records of
attorneys or accountants relating to their respective representations of any
Seller Entity in connection with the negotiation, execution and delivery of
this Agreement.


 


11.6                        Office
Leases.  The parties intend that
as soon as practical after the Closing, those portions of the Business’s
operations currently taking place in Los Angeles and Salt Lake City will
either: (a) be moved into space occupied by Purchaser’s


 


35





















 


existing Century City and Salt Lake City offices,
respectively; or (b) jointly occupy, with Purchaser’s existing operations,
newly leased offices in the Los Angeles and Salt Lake City areas,
respectively.  Accordingly, the
Partnership will use its best efforts to assist Purchaser in: (a) terminating
Purchaser’s assumed obligations under the Los Angeles Sublease and the Salt
Lake City Lease respectively as soon as practical after the Closing; (b) to
minimize any financial penalties under the respective leases for early
termination; and (c) to minimize any additional rent payable as a result
of Purchaser’s holdover status under the Salt Lake City Lease.


 


11.7                        Updated
Financial Statements.  Within
thirty (30) days after the Closing, the Partnership will prepare and deliver to
the Purchaser balance sheets and statements of income of the Partnership for
the period ended on the last day of the calendar month immediately preceding
the Closing Date, prepared by the Partnership consistent with prior practices.


 


12                                  Conditions
Precedent To Obligations Of Purchaser and Parent.


 


The obligations of Purchaser and Parent under this
Agreement are subject to the fulfillment of all of the following conditions
precedent on or before the Closing Date, each of which may be waived in writing
at the sole discretion of Purchaser.  The
Partnership must execute and deliver a certificate in substantially the form
attached hereto as Exhibit I certifying the satisfaction of all of
the conditions precedent set forth in this Section 12.  If any of the conditions precedent to the
obligations of Purchaser and Parent are not satisfied or waived on the Closing
Date, Purchaser will have the right to elect not to proceed with the Closing
and, except as otherwise set forth in this Agreement, the parties will have no
further rights or obligations under this Agreement, the Director Agreements or
otherwise.


 


12.1                        Continued
Truth of Representations and Warranties; No Breach.  The representations and warranties made by
the Seller Entities in this Agreement will be true and correct in all Material
respects on and as of the Closing Date, and the Seller Entities will have
performed and complied in all Material respects with all terms, conditions,
obligations, agreements and restrictions required by this Agreement to be
performed or complied with by them prior to or on the Closing Date, including
making the deliveries required under Section 6.2 hereof.


 


12.2                        Absence
of Litigation.  No action or
proceeding will have been instituted or threatened orally or in writing by any
public authority prior to the Closing Date before a Governmental Body for the
stated purpose of enjoining or preventing the consummation of this Agreement
and the transactions contemplated hereby or to recover damages by reason
thereof.  No action or proceeding will
have been instituted or threatened in writing by any private Person prior to
the Closing Date before a Governmental Body for the stated purpose of enjoining
or preventing the consummation of this Agreement and the transactions
contemplated hereby.


 


36





















 


12.3                        Landlord
Consents.


 


12.3.1                  The parties will
have obtained the written consent of Pachulski, Stang, Ziehl, Young, Jones &
Weintraub PC. as sub-landlord under the Los Angeles Sublease to the Los Angeles
Sublease Assignment.


 


12.3.2                  The parties will
have obtained the written consent of Phoenix Home Life Mutual Insurance Company
as landlord under the Salt Lake City Lease to the Salt Lake City Lease
Assignment.


 


12.3.3                  The parties will
have obtained the written consent of Wilmington Center, LLC as landlord under
the Wilmington Lease to the Wilmington Lease Assignment.


 


12.4                        No
Material Adverse Change.  No
Material Adverse Change shall have occurred in the Neilson Practice between the
Interim Financial Statement Date and the Closing Date.


 


12.5                        Errors
and Omissions Insurance.  The
Partnership will have obtained an extension of its existing errors and
omissions insurance coverage for the twelve (12) months immediately following
the Closing Date (the “Errors and Omissions Tail
Policy”).  The Errors and
Omissions Tail Policy will name Purchaser and Parent as additional insureds.


 


13                                  Conditions
To Obligations Of Seller Entities.


 


The obligations of the Seller Entities under this
Agreement are subject to the fulfillment of all of the following conditions
precedent on or before the Closing Date, each of which may be waived in writing
at the sole discretion of the Partnership. 
Each of Purchaser and Parent must execute and deliver a certificate in
substantially the forms attached hereto as Exhibits J and K,
respectively, certifying the satisfaction of all of the conditions precedent
set forth in this Section 13.  If
any of the conditions precedent to the obligations of the Seller Entities are
not satisfied or waived on the Closing Date, the Seller Entities will have the
right to elect not to proceed with the Closing and the parties will have no
further rights or obligations under this Agreement, the Director Agreements or
otherwise.


 


13.1                        Continued
Truth of Representations and Warranties; No Breach.  The representations and warranties made by
Purchaser and Parent in this Agreement will be true in all Material respects on
and as of the Closing Date, and Purchaser and Parent will have performed and
complied in all Material respects with all terms, conditions, obligations,
agreements and restrictions required by this Agreement to be performed or
complied with by them prior to or on the Closing Date, including making the
deliveries required under Section 6.3 hereof.


 


13.2                        Absence
of Litigation.  No action or
proceeding will have been instituted or threatened orally or in writing by any
public authority prior to the Closing Date before a Governmental Body for the
stated purpose of enjoining or preventing the


 


37





















 


consummation of this Agreement and the transactions
contemplated hereby or to recover damages by reason thereof.  No action or proceeding will have been
instituted or threatened in writing by any private Person prior to the Closing
Date before Governmental Body for the stated purpose of enjoining or preventing
the consummation of this Agreement and the transactions contemplated hereby.


 


13.3                        Landlord
Consents.


 


13.3.1                  The parties will
have obtained the written consent of Pachulski, Stang, Ziehl, Young, Jones &
Weintraub PC as sub-landlord under the Los Angeles Sublease to the Los Angeles
Sublease Assignment.


 


13.3.2                  The parties will
have obtained the written consent of Phoenix Home Life Mutual Insurance Company
as landlord under the Salt Lake City Lease to the Salt Lake City Lease
Assignment.


 


13.3.3                  The parties will
have obtained the written consent of Wilmington Center, LLC as landlord under
the Wilmington Lease to the Wilmington Lease Assignment.


 


13.4                        No
Material Adverse Change.  No
change shall have occurred in the business of Purchaser or Parent between June 30,
2005 and the Closing Date that would trigger an obligation on the part of the
Parent under the 1934 Act to file a Form 8-K or other change report with
the Securities and Exchange Commission.


 


14                                  Survival
Of Representations And Warranties.


 


The representations and warranties of the parties
contained herein, and all claims and causes of action related thereto, will
survive the consummation of the transactions contemplated hereby until the
second anniversary of the Closing Date. 
Notwithstanding the foregoing, the limitation period for the survival of
representations and warranties set forth in this Section 14 will not apply
to any breach of a representation or warranty as a result of fraud.


 


15                                  Indemnification.


 


15.1                        Indemnification
By Seller Entities.


 


(a)                                  Subject
to the limitations set forth in Section 15.3, the Seller Entities, jointly
and severally, agree to indemnify, defend and hold harmless each of Purchaser,
Parent and any of their respective members, shareholders, officers, directors,
employees, agents, affiliates, successors or assigns (each, a “Purchaser Party”) from any loss,
damage or expense (including reasonable attorneys’ fees) (collectively, “Losses”) that a Purchaser Party may
incur, suffer or become liable for as a result of or in connection with (i) the
breach of any representation or warranty of any Seller Entity contained in this
Agreement, including any Exhibit or Schedule hereto, occurring or
developing during the period of survival of such representation or warranty,
provided that the Purchaser Party makes a written claim for indemnification
against the Seller Entities


 


38





















 


within the two (2) year survival period; (ii) the
breach of any covenant of any Seller Entity contained in this Agreement or the
other Transaction Documents; or (iii) any assertion against a Purchaser
Party of any claim or liability constituting an Excluded Liability, including,
without limitation, the assertion against a Purchaser Party by any Person of
any obligation or liability relating to the Purchased Assets, the conduct of
the Business by the Partnership, or the conduct of any Seller Entity prior to
the Closing Date, including, without limitation, Tax claims or
liabilities.  Notwithstanding the
foregoing, other than as set forth in Section 11.3.2, the Seller Entities
will have no indemnification, defense or hold harmless obligation to any
Purchaser Party with respect to the liability of any Purchaser Party for Taxes
as a result of the transactions contemplated by this Agreement or the Director
Agreements.  Purchaser, acting on behalf
of a Purchaser Party, will give the Seller Entities prompt written notice of
any claim, suit or demand that Purchaser believes will give rise to
indemnification by the Seller Entities under this section stating in
reasonable detail the nature and basis of such claim, suit or demand, provided,
however, that, the failure to give such notice will not affect the
obligations of the Seller Entities hereunder, except to the extent they are
prejudiced by such failure.


 


(b)                                 Except
as hereinafter provided and except where a conflict of interest between any
Seller Entity and the Purchaser Party suggests separate counsel is appropriate,
the Seller Entities will have the right to defend and to direct the defense
against any such claim, suit or demand, in its name or in the name of the
Purchaser Party at the Seller Entities’ expense and with outside counsel of the
Seller Entities’ own choosing.  Each
Purchaser Party will, at the Seller Entities’ expense, cooperate reasonably in
the defense of any such claim, suit or demand. 
If the Seller Entities, within a reasonable time after notice of a
claim, fail to reasonably defend a Purchaser Party, the Purchaser Party will be
entitled to undertake the defense, compromise or settlement of such claim at
the expense of and for the account and risk of the Seller Entities subject to
the right of the Seller Entities to assume the defense of such claim at any
time prior to the settlement, compromise or final determination thereof if the
only issues remaining therein involve liability for, or the amount of, money
damages to be assessed against the Purchaser Party, provided no Seller Entity
will, without the Purchaser Party’s written consent, settle or compromise any
claim or consent to any entry of judgment that does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Purchaser Party a release from all liability in respect of such claim.


 


15.2                        Indemnification
by Purchaser and Parent.  Subject
to the limitations set forth in Section 15.3, Purchaser and Parent,
jointly and severally, agree to indemnify, defend and hold harmless the Seller
Entities, and each of their respective employees, agents, affiliates,
successors or assigns (each, a “Seller Party”)
from any Losses that a Seller Party may incur, suffer or become liable for as a
result of or in connection with (a) the breach of any representation or
warranty of Purchaser or Parent contained in this Agreement, including any Exhibit or
Schedule hereto, occurring or developing during the period of survival of
such representation or warranty; (b) the breach of any agreement of
Purchaser or Parent contained in this Agreement or the other Transaction
Documents; or (c) any assertion against a Seller Party of any claim or
liability constituting an Assumed Liability or relating to the Purchased Assets
or the conduct of the Business by Purchaser or Parent on or after the Closing
Date, including, without limitation, Tax claims or


 


39





















 


A mark of *** on this page indicates that confidential material has
been omitted. This Exhibit, including the omitted portions, has been filed
separately with the Secretary of the Securities and Exchange Commission
pursuant to an application requesting confidential treatment under Rule 24b-2
of the Securities Exchange Act of 1934.


 


liabilities. 
Notwithstanding the foregoing, other than as set forth in Section 11.3,
Purchaser will have no indemnification, defense or hold harmless obligation to
any Seller Party with respect to the liability of any Seller Party for Taxes as
a result of the transactions contemplated by this Agreement or the Director
Agreements.  The Representative, on
behalf of each Seller Party, will give Purchaser prompt written notice of any
claim, suit or demand that the Partnership believes will give rise to
indemnification by Purchaser under this paragraph stating in reasonable detail
the nature and basis of such claim, suit or demand; provided, however,
that, the failure to give such notice will not affect the obligations of
Purchaser hereunder, except to the extent it is prejudiced by such
failure.  Except as hereinafter provided
and except where a conflict of interest between a Seller Party and Purchaser
and Parent suggests separate counsel is appropriate, Purchaser will have the
right to defend and to direct the defense against any such claim, suit or
demand, in its name or in the name the Seller Party at Purchaser’s expense and
with outside counsel of Purchaser’s own choosing.  Each Seller Party will, at Purchaser’s
expense, cooperate reasonably in the defense of any such claim, suit or
demand.  If Purchaser, within reasonable
time after notice of a claim, fails to reasonably defend a Seller Party, such
Seller Party will be entitled to undertake the defense, compromise or
settlement of such claim at the expense of and for the account and risk of
Purchaser subject to the right of Purchaser to assume the defense of such claim
at any time prior to the settlement, compromise or final determination thereof
if the only issues remaining therein involve liability for, or the amount of,
money damages to be assessed against Seller Party, provided that Purchaser will
not, without the Seller Party’s written consent, settle or compromise any claim
or consent to any entry of judgment which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the Seller Party a
release from all liability in respect of such claim.


 


15.3                        Limitations.  The indemnification provided for in Section 15.1
and 15.2 will be subject to the following limitations:


 


15.3.1                  The Seller
Entities will not have any obligation to pay any indemnification amounts for
Losses pursuant to Section 15.1 (other than clause (a)(iii)) (a) less
than *** with respect to each such individual breach and (b) until the
aggregate amount of all Losses pursuant thereto, including the amount of any
rent paid on a holdover basis by Purchaser in excess of the Base Rent, and any
damages paid by Purchaser, under Article 14 of the Salt Lake City Lease,
exceeds an aggregate deductible of *** (the “Basket”),
whereupon the Purchaser Parties will be entitled to indemnification thereunder
for all such Losses (back to the first dollar of the Basket).  In no event will the aggregate amount recovered
from all Seller Entities with respect to this Section 14 exceed ***.


 


15.3.2                  In no event will
the aggregate amount recovered from the Purchaser and the Parent with respect
to this Section 14 exceed ***.


 


40





















 


15.3.3                  The parties
acknowledge and agree that the foregoing indemnification provisions in this Section 15
will be the sole and exclusive remedies of the Purchaser Parties and the Seller
Parties for any inaccuracy or breach of the representations, warranties or
covenants in this Agreement (other than under either Sections 14.1(a)(iii) or
14.2(c)) except in the event of fraud by another party.


 


15.4                        Insurance
and Tax Effect.


 


15.4.1                  The amount of
any Loss for which indemnification is provided under any of Sections 15.1 or 15.2
will be net of any amounts (net of the costs of recovery of such amounts)
recoverable by the indemnified party under insurance policies, indemnification
agreements or similar arrangements with respect to such Loss (collectively, a “Net Loss”).


 


15.4.2                  Any payments
made pursuant to the provisions of this Section 15 will be treated as an
adjustment to the total consideration payable to the Partnership under this
Agreement.  The amount of any Loss will
be reduced to take account of any net Tax benefit (if any) actually realized by
the indemnified party arising from the incurrence or payment of any such Net
Loss.


 


16                                  Right
of Offset.


 


Purchaser will be entitled, but not obligated, to
offset any portion of the Earn Out Payment or Additional Earnout Payment
against Losses for which Purchaser is entitled to indemnification from the Selling
Entities under Section 15.  If
Purchaser undertakes an offset of the Earn Out Payment against Losses and it is
finally determined by a court of competent jurisdiction that such Losses have
not been incurred, then Purchaser will pay interest on the amount of such
improper offset at the average federal funds rate as calculated over the period
of such offset from the date of the offset through the date when such improper
offset amount is paid to the Selling Entities.


 


17                                  Termination
of Agreement.


 


The parties may, but are not obligated to, terminate
this Agreement as provided below:


 


(a)                                  Purchaser
and the Partnership may terminate this Agreement by mutual written consent at
any time prior to the Closing;


 


(b)                                 Purchaser
may terminate this Agreement by giving written notice to the Partnership at any
time prior to the Closing (i) in the event the Partnership has breached
any representation, warranty, or covenant contained in this Agreement,
Purchaser has notified the Partnership in writing of the breach, and the breach
has continued without cure for a period of ten (10) days after the notice
of breach, or (ii) if the Closing will not have occurred on or before November 1,
2005 by reason of the failure of any condition precedent under Section 12
(unless the failure results primarily from Purchaser or Parent breaching in any
Material way any representation, warranty, or


 


41





















 


A mark of *** on this page indicates that confidential material has
been omitted. This Exhibit, including the omitted portions, has been filed
separately with the Secretary of the Securities and Exchange Commission
pursuant to an application requesting confidential treatment under Rule 24b-2
of the Securities Exchange Act of 1934.


 


covenant contained in this Agreement or Purchaser or
Parent fails to make good faith efforts to fulfill its obligations under this
Agreement); and


 


(c)                                  The
Partnership may terminate this Agreement by giving written notice to Purchaser
at any time prior to the Closing (i) in the event Purchaser or Parent has
breached any representation, warranty, or covenant contained in this Agreement,
the Partnership has notified Purchaser in writing of the breach, and the breach
has continued without cure for a period of ten (10) days after the notice
of breach, or (ii) if the Closing will not have occurred on or before November 1,
2005 by reason of the failure of any condition precedent under Section 13
(unless the failure results primarily from the Partnership breaching in any
Material way any representation, warranty or covenant contained in this
Agreement or the Partnership fails to make good faith efforts to fulfill its
obligations under this Agreement).


 


18                                  Effect
of Termination.


 


If any party terminates this Agreement pursuant to Section 17,
all rights and obligations of the parties under this Agreement will terminate
without any liability of any party to any other party (except for any liability
of any party then in breach); provided, however, that the confidentiality
provisions of Section 11.1 will survive termination.


 


19                                  ***


 


20                                  Expenses.


 


Except as may otherwise be expressly provided herein,
each party to this Agreement will pay his, her or its own expenses in
connection with this Agreement and the transactions contemplated hereby,
including taxes, recording fees and attorneys’ or accountants’ fees.


 


21                                  Notices.


 


Any notices or other communications required or
permitted hereunder will be sufficiently given if delivered personally or sent
by registered or certified mail, return receipt requested, postage prepaid, or
transmitted by telecopy with confirmation copy sent by first class mail,
postage prepaid, addressed as follows or to such other address of which the
parties may have given notice in accordance with this Section:


 


42





















 


A mark of *** on this page indicates that confidential material has
been omitted. This Exhibit, including the omitted portions, has been filed
separately with the Secretary of the Securities and Exchange Commission
pursuant to an application requesting confidential treatment under Rule 24b-2
of the Securities Exchange Act of 1934.


 


In the case of Purchaser, to:


 


LECG, LLC


2000 Powell Street, Suite 600


Emeryville, California  94608


Attention: 
Chief Financial Officer


Fax: 
(510) 653-9898


 


In the case of Parent, to:


 


LECG Corporation


2000 Powell Street, Suite 600


Emeryville, California  94608


Attention: 
Chief Financial Officer


Fax: 
(510) 653-9898


 


with copies of notices to Purchaser or Parent
to:


 


Marvin A. Tenenbaum, Esq.


General Counsel


LECG, LLC


33 West Monroe Street, Suite 1850


Chicago, IL 60603


Fax: 
(312) 267-8220


 


and


 


Carol Kerr, Esq.


Folger Levin & Kahn, LLP


1900 Avenue of the Stars, Suite 2800


Los Angeles, California 90067


Fax: 
(310) 556-3770


 


In the case of the Seller Entities, to:


 


David Judd


Neilson Elggren LLP


***


Fax:  (                       )


 


with a copy to:


 


Dale T. Hansen


Parr Waddoups Brown Gee & Loveless


185 South State Street, Suite 1300


Salt Lake City, Utah 84111-1537


Fax:  (801) 532-7750


 


43





















 


22                                  Successors.


 


This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that no party may assign its rights or obligations hereunder (directly
or indirectly or as a matter of law) without the prior written consent of all
of the other parties.  Notwithstanding
the foregoing, any Partner may assign his rights to payment, if any, under this
Agreement to (a) any other Partner, (b) any of the Partner’s spouse
or biological or adoptive lineal ancestors or descendants, (c) trusts for
the benefit of the Partner and/or one or more of such spouse, ancestors or
descendants, or (d) the Partner’s executor, administrator, trustee or
personal representative to whom such rights and obligations are transferred at
death.


 


23                                  Article and
Section Headings.


 


The Article and Section headings used in
this Agreement are for the convenience of the parties and in no way alter,
modify, amend, limit, or restrict the contractual obligations of the parties.


 


24                                  Governing
Law; Consent To Service.


 


This Agreement will be governed by and construed in
accordance with the laws of the State of California applicable to agreements
made and to be performed therein (without giving effect to the conflict of law
provisions of such jurisdiction).  The
parties agree that service of process of notice in any such action, suit or
proceeding will be effective if in writing and sent by certified or registered
mail, return receipt requested, postage prepaid, as provided in Section 21.


 


25                                  Dispute
Resolution.


 


In the event of any dispute or disagreement arising
out of or relating to this Agreement (a “Dispute”),
the parties will attempt to resolve such Dispute by good faith negotiation
prior to resorting to mediation or litigation. 
In the event such Dispute is not resolved by means of such good faith
negotiation, any party (the “Proposing Party”)
may require the Dispute to be referred to the non-binding mediation of a single
mediator (the “Mediator”) to be appointed
jointly by the parties.  The Proposing
Party will give written notice to the other parties of the Proposing Party’s
intention to refer the Dispute to mediation (the “Mediation
Notice”).  Such Mediation
Notice will specify in reasonable detail the nature of the issue giving rise
thereto and nominate a single mediator to co-appoint, along with the other
party’s selection of mediator, the Mediator. 
Within ten (10) days after the delivery of the Mediation Notice,
the other party to the Dispute will nominate in writing to the Proposing Party
a second mediator.   The two mediators so
chosen will, within ten (10) days after the second mediator’s selection,
jointly appoint a single mediator to serve as the Mediator. The Mediator will
conduct the mediation in accordance with the guidelines set by the parties to
the Dispute.   In the event such
guidelines cannot be agreed upon, the mediation will be governed by the Rules of
Practice and Procedure of Judicial Arbitration & Mediation Services, Inc.
(JAMS), or its successor entity.  The
costs of engaging the Mediator will be borne equally by the


 


44





















 


Proposing
Party and the other party to the Dispute and each party will bear its own costs
of preparing the materials for and making presentations to the Mediator.  The mediation will be held in Emeryville,
California.


 


26                                  Entire
Agreement.


 


This Agreement and the other Transaction Documents,
including all schedules and exhibits hereto and thereto represent the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior negotiations between
the parties including, without limitation, those certain Term Sheets dated August 1,
2005, and cannot be amended, supplemented or changed orally, but may only be so
modified by an agreement in writing, which makes specific reference to this
Agreement or the applicable Transaction Document delivered pursuant hereto, and
which is signed by the party against whom enforcement of any such amendment,
supplement or modification is sought.


 


27                                  Survival.


 


The respective rights and obligations of the parties
set forth in Sections 3.3, 3.4, 3.5, 3.6, 4, 5, 11, and 14 through 28 of this
Agreement will survive the Closing.


 


28                                  Parent
Guaranty.


 


Parent absolutely and unconditionally guaranties the
performance of all of Purchaser’s obligations under this Agreement and the
other Transaction Documents, and will be responsible, jointly and severally,
for any breach by Purchaser of any of the Transaction Documents.


 


29                                  Counterparts.


 


This Agreement may be signed in two or more
counterparts, each signed by one or more of the parties hereto so long as each
party will sign at least one counterpart of this Agreement, all of which taken
together will constitute one and the same instrument.  Signatures delivered by facsimile or electronic
file format will be treated in all respects as originals.


 


[Remainder
of this Page Intentionally Left Blank]


 


45





















 


IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed by their duly authorized
representatives as of the date first above written.


 


 


	
  PURCHASER:

  	
  PARENT:

  
	
   

  	
   

  
	
   

  	
   

  
	
  LECG, LLC

  	
  LECG Corporation,

  
	
  A California limited liability company 

  	
  A Delaware corporation

  
	
   

  	
   

  
	
  By:

  	
  LECG Corporation

  	
  By:

  	
  /s/ John C. Burke

  	
   

  
	
  Its:

  	
  Sole Manager 

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
  By:

  	
  /s/ John C. Burke

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SELLER ENTITIES:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Neilson Elggren LLP 

  
	
   

  	
  a Utah limited liability partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R. Todd Neilson

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Managing Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Vernon L. Calder

  	
   

  
	
   

  	
  Vernon L. Calder

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Thomas P. Jeremiassen

  	
   

  
	
   

  	
  Thomas P. Jeremiassen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ David H. Judd

  	
   

  
	
   

  	
  David H. Judd

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ R. Todd Neilson

  	
   

  
	
   

  	
  R. Todd Neilson

  
														



 


46





















 


	
   

  	
  /s/ Paul N. Shields

  	
   

  
	
   

  	
  Paul N. Shields

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ D. Ray Strong

  	
   

  
	
   

  	
  D. Ray Strong

  
				



 


47