EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXX & XxXXXXXX COMPANIES, INC.,
KING MERGER CORP.,
a wholly owned direct subsidiary of Xxxxx & XxXxxxxx Companies, Inc.,
and
XXXXX INC.
May 18, 2004
TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER................................................2
1.1 The Merger...................................................2
1.2 Closing; Effective Time......................................2
1.3 Effects of the Merger........................................2
1.4 Certificate of Incorporation and Bylaws......................2
1.5 Directors and Officers of the Surviving Corporation..........2
1.6 Kroll Stockholders Meeting...................................2
1.7 Additional Actions...........................................3
ARTICLE II CONVERSION OF SECURITIES..................................4
2.1 Effect on Capital Stock......................................4
2.2 Surrender and Payment........................................5
2.3 Treatment of Stock Options; Employee Stock Purchase Plan.....7
2.4 Adjustments to Prevent Dilution..............................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MMC AND MERGER SUB......8
3.1 Organization and Standing....................................8
3.2 Corporate Power and Authority................................9
3.3 Conflicts; Consents and Approval.............................9
3.4 Brokerage and Finders' Fees.................................10
3.5 Information Supplied........................................10
3.6 Available Funds.............................................10
3.7 Capitalization of Merger Sub................................10
3.8 Section 203 of the DGCL.....................................10
3.9 State Takeover Statute......................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF KROLL..................11
4.1 Organization and Standing...................................11
4.2 Subsidiaries................................................11
4.3 Corporate Power and Authority...............................12
4.4 Capitalization of Kroll.....................................12
4.5 Conflicts; Consents and Approvals...........................13
4.6 Brokerage and Finders' Fees; Expenses.......................14
4.7 Kroll SEC Documents.........................................14
4.8 Undisclosed Liabilities.....................................15
4.9 Information Supplied........................................15
4.10 Compliance with Law.........................................16
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4.11 Litigation..................................................16
4.12 Absence of Certain Changes or Events........................16
4.13 Taxes.......................................................17
4.14 Intellectual Property.......................................18
4.15 Employee Benefit Plans......................................19
4.16 Contracts; Indebtedness.....................................22
4.17 Labor Matters...............................................23
4.18 Customer/Supplier Relationships.............................23
4.19 Environmental Matters.......................................23
4.20 Insurance...................................................24
4.21 Opinion of Financial Advisor................................24
4.22 Board Recommendation; Required Vote.........................24
4.23 Section 203 of the DGCL.....................................25
ARTICLE V COVENANTS OF THE PARTIES.................................25
5.1 Mutual Covenants............................................25
(a) Reasonable Best Efforts........................25
(b) HSR Act........................................25
(c) Public Announcements...........................26
(d) Conveyance Taxes...............................26
(e) Notice of Certain Events.......................26
5.2 Covenants of MMC............................................26
(a) Indemnification; Directors' and Officers'
Insurance......................................26
(b) Employees and Employee Benefits................27
5.3 Covenants of Kroll..........................................28
(a) Conduct of Xxxxx'x Operations..................28
(b) Acquisition Proposals..........................30
(c) Third Party Standstill Agreements..............33
(d) Access.........................................33
(e) Termination of Kroll Credit Agreement..........33
(f) Supplemental Indenture.........................34
ARTICLE VI CONDITIONS TO THE MERGER.................................34
6.1 Conditions to the Obligations of Each Party.................34
6.2 Conditions to Obligations of MMC and Merger Sub.............34
6.3 Conditions to Obligation of Kroll...........................35
ARTICLE VII TERMINATION; FEES AND EXPENSES...........................35
7.1 Termination by Mutual Consent...............................35
7.2 Termination by Either MMC or Kroll..........................35
7.3 Termination by Kroll........................................36
7.4 Termination by MMC..........................................36
7.5 Effect of Termination and Abandonment.......................36
7.6 Fees and Expenses...........................................37
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ARTICLE VIII MISCELLANEOUS............................................38
8.1 Non-Survival of Representations and Warranties..............38
8.2 Notices.....................................................38
8.3 Interpretation..............................................39
8.4 Counterparts................................................40
8.5 Entire Agreement............................................40
8.6 Third-Party Beneficiaries...................................40
8.7 Governing Law...............................................40
8.8 Consent to Jurisdiction; Venue..............................40
8.9 Specific Performance........................................41
8.10 Assignment..................................................41
8.11 Amendment...................................................41
8.12 Extension; Waiver...........................................41
8.13 Severability................................................41
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INDEX OF DEFINED TERMS
DEFINED TERM SECTION
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1996 Plan...................................................... 2.3(a)
1996 Option.................................................... 2.3(a)
Acquisition Proposal........................................... 5.3(b)(viii)(A)
Action......................................................... 4.11
Agreement...................................................... Preamble
Applicable Laws................................................ 2.2(a)
Appraisal Shares............................................... 2.1(d)
Board.......................................................... Recitals
Capitalization Date............................................ 4.4(a)
Certificate.................................................... 2.1(b)
Certificate of Merger.......................................... 1.2
Closing........................................................ 1.2
Closing Date................................................... 1.2
Code........................................................... 2.2(g)
Commission..................................................... 1.6(b)
Controlled Group Liability..................................... 4.15(a)(i)
Confidentiality Agreement...................................... 5.3(b)(iii)
Covered Proposal............................................... 7.6(a)(i)
Delaware Secretary of State.................................... 1.2
DGCL........................................................... 1.1
Effective Time................................................. 1.2
Environmental Laws............................................. 4.19
Environmental Permit........................................... 4.19
ERISA.......................................................... 4.15(a)(ii)
ERISA Affiliate................................................ 4.15(a)(iii)
ESPP........................................................... 2.3(b)
Exchange Act................................................... 4.7(a)
Exchange Fund.................................................. 2.2(a)
Expenses....................................................... 7.6(b)
Foreign Antitrust Laws......................................... 3.3(d)
GAAP........................................................... 4.7(a)
Governmental Authority......................................... 3.3(d)
Hazardous Materials............................................ 4.19
HSR Act........................................................ 3.3(d)
Indemnified Person............................................. 5.2(a)(i)
Indenture...................................................... 5.3(f)
Intellectual Property Right.................................... 4.14(a)(i)
Key Kroll Individual........................................... 5.3(a)(viii)
Kroll.......................................................... Preamble
Kroll Board Recommendation..................................... 4.22
Kroll Bylaws................................................... 1.6(a)
Kroll Certificate.............................................. 1.6(a)
Kroll Common Stock............................................. Recitals
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Kroll Credit Agreement......................................... 5.3(e)
Kroll Disclosure Schedule...................................... 4.2
Kroll Employees................................................ 5.2(b)(ii)
Kroll Intellectual Property Right.............................. 4.14(a)(ii)
Kroll Option................................................... 2.3(a)
Kroll Permits.................................................. 4.10
Kroll SEC Documents............................................ 4.7(a)
Kroll Stockholders............................................. 1.6(a)
Kroll Stockholders Meeting..................................... 1.6(a)
MMC............................................................ Preamble
Material Adverse Effect........................................ 8.3
Material Contracts............................................. 4.16(a)
Merger......................................................... Recitals
Merger Consideration........................................... 2.1(b)
Merger Sub..................................................... Preamble
Multiemployer Plan............................................. 4.15(f)
Multiple Employer Plan......................................... 4.15(f)
Paying Agent................................................... 2.2(a)
Participant.................................................... 2.3(a)
Person......................................................... 5.3(b)(i)
Plans.......................................................... 4.15(a)(iv)
Proxy Statement................................................ 1.6(b)
Qualified Plan................................................. 4.15(c)
Representatives................................................ 5.3(b)(i)
Section 262.................................................... 2.1(b)
Securities Act................................................. 4.7
Stock Plan Termination Date.................................... 2.3(b)
subsidiary..................................................... 8.3
Substitute Right............................................... 2.3(a)
Superior Proposal.............................................. 5.3(b)(viii)(B)
Superior Proposal Notice....................................... 5.3(b)(iii)
Support Agreement.............................................. Recitals
Surviving Corporation.......................................... 1.1
Tax Returns.................................................... 4.13(b)
Taxes.......................................................... 4.13(c)
Termination Date............................................... 7.2
Termination Fee................................................ 7.6(a)
Waiting Period................................................. 5.3(b)(iii)
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of the 18th day of May, 2004, by and among Xxxxx & McLennan
Companies, Inc., a Delaware corporation ("MMC"), King Merger Corp., a Delaware
corporation and a wholly owned subsidiary of MMC ("Merger Sub"), and Kroll Inc.,
a Delaware corporation ("Kroll").
RECITALS
WHEREAS, MMC and Kroll desire that MMC combine its businesses with the
businesses operated by Kroll through the merger of Merger Sub with and into
Kroll, with Kroll as the surviving corporation (the "Merger"), pursuant to which
each share of common stock of Kroll, par value $0.01 per share ("Kroll Common
Stock") issued and outstanding at the Effective Time (as defined in Section
1.2), other than the shares of Kroll Common Stock owned by MMC, Merger Sub or
Kroll (or any of their respective direct or indirect wholly owned subsidiaries
(as defined in Section 8.3)) and other than the Appraisal Shares (as defined in
Section 2.1(d)), will be converted into the right to receive the Merger
Consideration (as defined in Section 2.1(b)), all as more fully provided in this
Agreement; and
WHEREAS, concurrently with the execution of this Agreement, as a
condition and inducement to MMC's willingness to enter into this Agreement, MMC
and certain Kroll Stockholders (as defined in Section 1.6(a)) are entering into
a Support Agreement, of even date herewith, in respect of shares of Kroll Common
Stock beneficially owned by such stockholders (the "Support Agreement"); and
WHEREAS, concurrently with the execution of this Agreement, as a
condition and inducement to MMC's willingness to enter into this Agreement, MMC
and certain Kroll executive officers and employees are entering into employment
agreement term sheets, of even date herewith; and
WHEREAS, the board of directors (the "Board") of each of MMC, Merger
Sub and Kroll has determined that the Merger upon the terms and subject to the
conditions set forth in this Agreement is advisable, fair to and in the best
interests of their respective stockholders; and
WHEREAS, MMC, Merger Sub and Kroll desire to make those
representations, warranties, covenants and agreements specified herein in
connection with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, MMC,
Merger Sub and Kroll agree as follows:
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ARTICLE I
THE MERGER
1.1. THE MERGER. Upon the terms and subject to the conditions of
this Agreement, and in accordance with the provisions of the Delaware General
Corporation Law (the "DGCL"), Merger Sub shall be merged with and into Kroll at
the Effective Time. As a result of the Merger, the separate corporate existence
of Merger Sub shall cease and Kroll shall continue its existence as a wholly
owned subsidiary of MMC under the laws of the State of Delaware. Kroll, in its
capacity as the corporation surviving the Merger, is hereinafter sometimes
referred to as the "Surviving Corporation."
1.2. CLOSING; EFFECTIVE TIME. A closing (the "Closing") shall be
held at the offices of Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx
Xxxx, X.X. 00000, or such other place as the parties hereto may agree, as soon
as practicable but no later than the second business day following the date upon
which all conditions set forth in Article VI (other than those conditions that
by their nature are to be satisfied or waived at the Closing, but subject to the
satisfaction or waiver of those conditions) are satisfied or waived, or at such
other date as MMC and Kroll may agree (such date, the "Closing Date"). As
promptly as possible on the Closing Date, the parties hereto shall cause the
Merger to be consummated by filing with the Secretary of State of the State of
Delaware (the "Delaware Secretary of State") a certificate of merger (the
"Certificate of Merger") in such form as is required by and executed in
accordance with Section 251 of the DGCL. The Merger shall become effective when
the Certificate of Merger has been filed with the Delaware Secretary of State or
at such later time as shall be agreed upon by MMC and Kroll and specified in the
Certificate of Merger (the "Effective Time").
1.3. EFFECTS OF THE MERGER. From and after the Effective Time, the
Merger shall have the effects set forth in Section 259 of the DGCL.
1.4. CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Merger shall provide that at the Effective Time, (a) the Surviving Corporation's
Certificate of Incorporation as in effect immediately prior to the Effective
Time shall be amended as of the Effective Time so as to contain the provisions,
and only the provisions, contained immediately prior thereto in Merger Sub's
Certificate of Incorporation, and (b) Merger Sub's Bylaws in effect immediately
prior to the Effective Time shall be the Surviving Corporation's Bylaws; in each
case, until amended in accordance with the DGCL.
1.5. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. From and
after the Effective Time, the officers of Kroll shall be the officers of the
Surviving Corporation and the directors of Merger Sub shall be the directors of
the Surviving Corporation, in each case, until their respective successors are
duly elected and qualified.
1.6. KROLL STOCKHOLDERS MEETING.
(a) As promptly as practicable following the date of this
Agreement, Kroll shall, in accordance with Applicable Laws (as defined in
Section 2.2(a)) and Xxxxx'x Amended
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and Restated Certificate of Incorporation as in effect on the date of this
Agreement (the "Kroll Certificate") and Xxxxx'x Amended and Restated Bylaws as
in effect on the date of this Agreement (the "Kroll Bylaws"), duly call, give
notice of, convene and hold a meeting of the holders of shares of Kroll Common
Stock (the "Kroll Stockholders") to consider and vote upon approval of this
Agreement and the Merger (the "Kroll Stockholders Meeting"). Kroll shall ensure
that the Kroll Stockholders Meeting is called, noticed, convened, held and
conducted, and that all proxies solicited by Kroll in connection with the Kroll
Stockholders Meeting are solicited in material compliance with Applicable Laws,
other than such non-compliance resulting from the failure of the representation
set forth in Section 3.5 to be true and correct.
(b) Kroll shall promptly prepare and file with the Securities and
Exchange Commission (the "Commission") a proxy statement (together with any
amendments thereof or supplements thereto, the "Proxy Statement") that meets in
all material respects the requirements of Applicable Laws to seek the approval
of this Agreement and the Merger. Kroll shall respond promptly to any comments
made by the Commission with respect to the Proxy Statement and any preliminary
version thereof filed by it and shall cause such Proxy Statement to be mailed to
the Kroll Stockholders as promptly as reasonably practicable. Kroll shall
promptly notify MMC of the receipt of any comments of the Commission with
respect to the Proxy Statement and shall provide to MMC copies of any written
comments received from the Commission in connection with the Proxy Statement.
MMC shall be provided an opportunity to review and comment on all filings with
the Commission, including the Proxy Statement, and all mailings to the Kroll
Stockholders in connection with the Merger, and Kroll shall give reasonable
consideration to all comments proposed by MMC. MMC shall promptly provide any
information or responses to comments or other assistance reasonably requested by
Kroll or the Commission in connection with the foregoing.
(c) Subject to the following sentence, the Kroll Board
Recommendation (as defined in Section 4.22) shall be included in the Proxy
Statement and the Kroll Board shall use its reasonable best efforts to solicit
the approval of this Agreement and the Merger by the Kroll Stockholders. In the
event that subsequent to the date of this Agreement, the Kroll Board determines
after consultation with outside counsel that its fiduciary duties under
Applicable Law require it to withdraw, modify or qualify the Kroll Board
Recommendation in a manner adverse to MMC, the Kroll Board may so withdraw,
modify or qualify the Kroll Board Recommendation; PROVIDED, HOWEVER, that the
Kroll Board may not recommend any Acquisition Proposal (as defined in Section
5.3(b)(viii)(A)) (other than this Agreement and the transactions contemplated
hereby, including the Merger), except as specifically contemplated by, and in
accordance with, Section 5.3(b)(iii); PROVIDED, FURTHER, HOWEVER, that unless
this Agreement is theretofore terminated, Kroll shall nevertheless submit this
Agreement to the Kroll Stockholders for adoption at the Kroll Stockholders
Meeting.
1.7. ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable to
(a) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Kroll or (b) otherwise carry out the provisions of this
Agreement, Kroll and its officers and directors shall be deemed to have granted
to the Surviving Corporation an irrevocable power of attorney to execute and
deliver all such deeds, assignments or assurances in
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law and to take all acts necessary, proper or desirable to vest, perfect or
confirm title to and possession of such rights, properties or assets in the
Surviving Corporation and otherwise to carry out the provisions of this
Agreement, and the officers and directors of the Surviving Corporation are
authorized in the name of Kroll or otherwise to take any and all such action.
ARTICLE II
CONVERSION OF SECURITIES
2.1. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of MMC, Merger Sub or Kroll or
their respective stockholders:
(a) Each share of common stock, $0.01 par value, of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into one fully paid and nonassessable share of common stock, $0.01 par
value, of the Surviving Corporation. Such newly issued shares shall thereafter
constitute all of the issued and outstanding Surviving Corporation capital
stock.
(b) Subject to the other provisions of this Article II, each share
of Kroll Common Stock issued and outstanding immediately prior to the Effective
Time (excluding any shares of Kroll Common Stock owned by MMC, Merger Sub or
Kroll or any of their respective wholly owned subsidiaries (which shares shall
be cancelled and shall cease to exist with no payment being made with respect
thereto) and any shares of Kroll Common Stock owned by stockholders properly
exercising appraisal rights pursuant to Section 262 of the DGCL ("Section 262"),
as provided in Section 2.1(d)) shall be converted into and represent the right
to receive $37.00 in cash, without interest (the "Merger Consideration"). At the
Effective Time, all shares of Kroll Common Stock that have been converted into
the right to receive the Merger Consideration as provided in this Section 2.1(b)
shall no longer be outstanding and automatically shall be cancelled and shall
cease to exist, and each holder of a certificate that immediately prior to the
Effective Time represented such shares of Kroll Common Stock (a "Certificate")
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration.
(c) Each share of Kroll capital stock held in the treasury of Kroll
automatically shall be cancelled and retired and no payment shall be made in
respect thereof.
(d) Notwithstanding anything in this Agreement to the contrary, the
shares of Kroll Common Stock issued and outstanding immediately prior to the
Effective Time that are held by any Kroll Stockholder that is entitled to demand
and properly demands appraisal of shares of Kroll Common Stock pursuant to, and
complies in all respects with, the provisions of Section 262 (the "Appraisal
Shares") shall not be converted into the right to receive the Merger
Consideration as provided in Section 2.1(b), but, instead, such Kroll
Stockholder shall be entitled to such rights (but only such rights) as are
granted by Section 262. At the Effective Time, all Appraisal Shares shall no
longer be outstanding and automatically shall be cancelled and shall cease to
exist, and, except as otherwise provided by Applicable Laws, each holder of
Appraisal Shares shall cease to have any rights with respect to the Appraisal
Shares, other than such rights
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as are granted by Section 262. Notwithstanding the foregoing, if any such Kroll
Stockholder shall fail to validly perfect or shall otherwise waive, withdraw or
lose the right to appraisal under Section 262 or if a court of competent
jurisdiction shall determine that such Kroll Stockholder is not entitled to the
relief provided by Section 262, then the rights of such Kroll Stockholder under
Section 262 shall cease, and such Appraisal Shares shall be deemed to have been
converted at the Effective Time into, and shall have become, the right to
receive the Merger Consideration as provided in Section 2.1(b) without interest.
Kroll shall give prompt notice to MMC of any demands for appraisal of any shares
of Kroll Common Stock, and MMC shall have the opportunity to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, Kroll shall not, without the prior written consent of MMC, make
any payment with respect to, or settle or offer to settle, any such demands, or
agree to do any of the foregoing.
2.2. SURRENDER AND PAYMENT.
(a) PAYING AGENT; EXCHANGE FUND. Prior to the Effective Time, for
the benefit of the Kroll Stockholders, MMC shall designate, or shall cause to be
designated (pursuant to an agreement in form and substance reasonably acceptable
to Kroll), a bank or trust company that is reasonably satisfactory to Kroll to
act as agent for the payment of the Merger Consideration in respect of
Certificates upon surrender of such Certificates in accordance with this Article
II from time to time after the Effective Time (the "Paying Agent"). At the
Effective Time, MMC shall deposit, or cause Merger Sub to deposit, with the
Paying Agent cash in an amount sufficient for the payment of the aggregate
Merger Consideration pursuant to Section 2.1(b) (assuming no Appraisal Shares)
upon surrender of such Certificates (such cash, the "Exchange Fund"). MMC shall
be obligated to, from time to time, deposit any additional funds necessary to
pay the aggregate Merger Consideration. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by MMC, on a daily basis. Any portion
of the Exchange Fund (including any interest and other income resulting from
investments of the Exchange Fund) that remains undistributed to the Kroll
Stockholders six months after the date of the mailing required by Section 2.2(b)
shall be delivered to MMC, upon demand by MMC, and holders of Certificates that
have not theretofore complied with this Section 2.2 shall thereafter look only
to MMC for payment of any claim to the Merger Consideration. If any Certificates
shall not have been surrendered prior to seven years after the Effective Time,
any such cash, dividends or distributions in respect of such Certificate shall,
to the extent permitted by all applicable laws, statutes, orders, rules,
regulations, policies or guidelines promulgated, or judgments, decisions or
orders entered by any Governmental Authority (as defined in Section 3.3(d)), in
each case, to the extent applicable (collectively, "Applicable Laws"), become
the property of MMC, free and clear of all claims or interest of any person
previously entitled thereto.
(b) EXCHANGE PROCEDURE. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall and MMC shall cause the Paying Agent to
mail to each holder of record of a Certificate (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates held by such Kroll Stockholder shall pass,
only upon proper delivery of the Certificates to the Paying Agent and shall be
in such form and have such other customary provisions as MMC may reasonably
specify), and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent
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or to such other agent or agents as may be appointed by MMC, together with such
letter of transmittal, duly completed and validly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate shall be paid in exchange therefor the amount of cash into which the
shares of Kroll Common Stock formerly represented by the Certificate shall have
been converted pursuant to Section 2.1(b), and the Certificate so surrendered
shall be cancelled. In the event of a transfer of ownership of Kroll Common
Stock that is not registered in the stock transfer books of Kroll, the proper
amount of cash may be paid in exchange therefor to a person other than the
person in whose name the Certificate so surrendered is registered if the
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
Taxes (as defined in Section 4.13(c)) required by reason of the payment to a
person other than the registered holder of the Certificate or establish to the
satisfaction of MMC that the Tax has been paid or is not applicable. No interest
shall be paid or shall accrue on the cash payable upon surrender of any
Certificate.
(c) STOCK TRANSFER BOOKS. At the close of business on the day on
which the Effective Time occurs, the stock transfer books of Kroll shall be
closed, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Kroll Common Stock
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Paying Agent for transfer or any other reason, they shall be cancelled and
exchanged as provided in this Article II.
(d) NO LIABILITY. None of MMC, Merger Sub, Kroll or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(e) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming a Certificate to be lost, stolen or destroyed and, if required by MMC
or the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as MMC or the Surviving Corporation may reasonably direct as
indemnity against any claim that may be made against it with respect to the
Certificate, the Paying Agent shall pay in respect of the lost, stolen or
destroyed Certificate the Merger Consideration.
(f) NO FURTHER OWNERSHIP RIGHTS IN KROLL COMMON STOCK. The Merger
Consideration paid in accordance with the terms of this Article II in respect of
Certificates that have been surrendered in accordance with the terms of this
Agreement shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of Kroll Common Stock represented thereby.
(g) WITHHOLDING RIGHTS. Each of the Surviving Corporation and MMC
shall be entitled to deduct and withhold, or cause the Paying Agent to deduct
and withhold, from the consideration otherwise payable pursuant to this
Agreement to any Kroll Stockholders such amounts as it may be required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or any provision of state, local
or foreign Tax law. To the extent that amounts are so withheld by the Surviving
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Corporation, MMC or the Paying Agent, as the case may be, the withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
Kroll Stockholders in respect of which the deduction and withholding was made by
the Surviving Corporation, MMC or the Paying Agent, as the case may be.
2.3. TREATMENT OF STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLAN.
(a) At the Effective Time, each option to purchase a share of Kroll
Common Stock (a "Kroll Option"), granted under the Kroll stock option plans in
effect on the date of this Agreement, or otherwise, that is outstanding
immediately prior to the Effective Time (whether or not vested) shall be
cancelled immediately prior to the Effective Time and converted into the right
to receive, from MMC or the Surviving Corporation, as soon as practicable
following the Effective Time (and in any event, no later than 10 days following
the Effective Time), an amount in cash (less any applicable withholding taxes)
equal to the excess, if any, of (A) the Merger Consideration over (B) the per
share exercise price of Kroll Common Stock subject to such Kroll Option;
PROVIDED, HOWEVER, with respect to each Kroll Option issued under the 1996 Kroll
Stock Option Plan (the "1996 Plan") to a participant therein (other than a
participant entitled to reimbursement for the tax imposed by Section 4999 of the
Code) (a "Participant"), which is subject to adjustment under Section 13.5 of
the 1996 Plan (a "1996 Option"), the Committee administering the 1996 Plan will
cause such 1996 Option to be cancelled and converted at the Effective Time, if
such cancellation and conversion would reduce the payments for such Participant
described in Section 280G(b)(2)(A)(i) of the Code below the threshold described
in 280G(b)(2)(A)(ii) of the Code, in which case such cancellation and conversion
shall be effected to the extent necessary to reduce the payments for such
Participant described in Section 280G(b)(2)(A)(i) of the Code to $10,000 (or
such lower number as would be obtained if all the 1996 Options were so cancelled
and converted) below the threshold described in 280G(b)(2)(A)(ii) of the Code
(by first canceling and converting the options which vest furthest from the
Effective Time), or as otherwise agreed upon by Kroll, MMC, and such
Participant, into the right to receive (a "Substitute Right"), in lieu of the
payment described above, when vested in accordance with the vesting schedule
applicable to such 1996 Option immediately prior to the Effective Time (based
upon the vesting provisions of the 1996 Plan and the applicable option
agreements), an amount in cash (less any applicable withholding taxes), from MMC
or the Surviving Corporation, equal to the excess, if any, of (A) the Merger
Consideration over (B) the per share exercise price of Kroll Common Stock
subject to such 1996 Option, plus interest accrued thereon at an annual money
market interest rate compounded quarterly for the period from the Effective Time
through the vesting date of such 1996 Option; and provided, further that any
Participant who receives Substitute Rights and whose employment is thereafter
terminated by Kroll or its successors or affiliates without cause shall be
entitled to payment for any unvested portion of such Substitute Rights upon such
termination if the Participant would be better off after payment of all taxes
(including the tax imposed by Section 4999 of the Code) by receiving such
payment than by forfeiting such payment. In making any determinations pursuant
to this Section 2.3(a), the Committee will take into account all payments to be
made to such holder in connection with the transactions contemplated by this
Agreement, and will provide that MMC shall have the right to approve any such
determination (which approval shall not be unreasonably withheld). Prior to the
Effective Time, Kroll shall take any and all actions necessary to effectuate
this Section 2.3(a), including amending the Kroll stock option plans.
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(b) Kroll shall take any and all actions with respect to Xxxxx'x
Employee Stock Purchase Plan (the "ESPP") as are necessary to provide that (i)
with respect to the Offering Period (as defined in the ESPP) in effect as of the
date of this Agreement, no employee who is not a participant in the ESPP as of
the date hereof may become after the date hereof a participant in the ESPP and
no participant in the ESPP may increase the percentage amount of his or her
payroll deduction election from that in effect on the date hereof for such
Offering Period; (ii) subject to consummation of the Merger, the ESPP shall
terminate, effective immediately before the Effective Time (the "Stock Plan
Termination Date"); and (iii) if the Offering Period (as defined in the ESPP) in
effect as of the date of this Agreement terminates prior to the Stock Plan
Termination Date, the ESPP shall be suspended and no new Offering Period will be
commenced under the ESPP prior to the termination of this Agreement. Subject to
consummation of the Merger, if such Offering Period is still in effect on the
Stock Plan Termination Date then on the Stock Plan Termination Date, each
purchase right under the ESPP as of the Stock Plan Termination Date shall be
automatically exercised by applying the payroll deductions of each participant
in the ESPP for such Offering Period to the purchase of a number of whole shares
of Kroll Common Stock (subject to the provisions of Xxxxx'x ESPP regarding the
number of shares purchasable) at an Exercise Price (as defined in the ESPP) per
share equal to 85% of the Fair Market Value (as defined in the ESPP) of a share
of Kroll Common Stock on the Grant Date (as defined in the ESPP) or on the Stock
Plan Termination Date, whichever is lower.
(c) Kroll shall take any actions reasonably requested by MMC to
effectuate the termination of the Kroll Options, it being understood that the
intention of the parties is that following the Effective Time no holder of a
Kroll Option or any participant in any Plan or other employee benefit
arrangement of Kroll shall have any right thereunder to acquire any capital
stock (including any "phantom" stock or stock appreciation rights) of Kroll or
the Surviving Corporation. Prior to the Effective Time, Kroll shall deliver to
the holders of Kroll Options and participants in the ESPP appropriate notices,
in form and substance reasonably acceptable to MMC, setting forth such holders'
rights pursuant to this Agreement.
2.4. ADJUSTMENTS TO PREVENT DILUTION. In the event that Kroll
changes the number of shares of Kroll Common Stock, or securities convertible or
exchangeable into or exercisable for shares of Kroll Common Stock, issued and
outstanding prior to the Effective Time as a result of a reclassification, stock
split (including a reverse stock split), stock dividend or distribution,
recapitalization, merger, subdivision, issuer tender or exchange offer, or other
similar transaction, the Merger Consideration shall be equitably adjusted to
reflect such change.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MMC AND MERGER SUB
In order to induce Kroll to enter into this Agreement, MMC and Merger
Sub represent and warrant to Kroll that the statements contained in this Article
III are true, correct and complete.
3.1. ORGANIZATION AND STANDING. Each of MMC and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the state of
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Delaware with full corporate power and authority to own, lease, use and operate
its properties and to conduct its business as and where now owned, leased, used,
operated and conducted.
3.2. CORPORATE POWER AND AUTHORITY. Each of MMC and Merger Sub has
all requisite corporate power and authority to enter into and deliver this
Agreement, to perform its obligations under the Agreement, and to consummate the
transactions contemplated by this Agreement. The execution, performance and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement by MMC and Merger Sub have been duly authorized by all
necessary corporate action on the part of each of MMC and Merger Sub. No other
corporate proceedings on the part of MMC or Merger Sub are necessary to
authorize or approve this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of MMC and Merger Sub, and, assuming the due authorization,
execution and delivery by Kroll, constitutes a legal, valid and binding
obligation of each of Merger Sub and MMC enforceable against each of them in
accordance with its terms, except that such enforceability (a) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (b) is subject to general
principles of equity.
3.3. CONFLICTS; CONSENTS AND APPROVAL. Neither the execution and
delivery of this Agreement by MMC or Merger Sub nor the consummation of the
transactions contemplated by this Agreement will:
(a) conflict with, or result in a breach of any provision of MMC's
Restated Certificate of Incorporation, or MMC's Bylaws, or Merger Sub's
Certificate of Incorporation or Merger Sub's Bylaws;
(b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event that, with the giving of
notice, the passage of time or otherwise, would constitute a default)
under, or entitle any individual or entity (with the giving of notice, the
passage of time or otherwise) to terminate, accelerate, modify or call a
default under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of MMC or any of
its subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, contract,
undertaking, agreement, lease or other instrument or obligation to which
MMC or any of its subsidiaries is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to MMC or any of its subsidiaries or their respective
properties or assets; or
(d) require any action or consent or approval of, or review by, or
registration or filing by MMC or any of its subsidiaries with, any third
party or any local, domestic, foreign or multinational court, arbitral
tribunal, administrative agency or commission or other governmental or
regulatory body, agency, instrumentality or authority (each of the
foregoing, a "Governmental Authority"), other than (i) actions required by
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(together with the rules and regulations thereunder, the "HSR Act") and
applicable laws, rules and regulations in foreign jurisdictions governing
antitrust or merger control matters ("Foreign Antitrust
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Laws"), (ii) compliance with any United States federal and state securities
laws and any other applicable takeover laws and (iii) the filing with the
Delaware Secretary of State of the Certificate of Merger;
except in the case of clauses (b), (c) and (d) above for any of the foregoing
that would not, individually or in the aggregate, have or reasonably be expected
to have a Material Adverse Effect (as defined in Section 8.3) on MMC or Merger
Sub.
3.4. BROKERAGE AND FINDERS' FEES. Except for MMC's obligations to
Xxxxxxxxx & Co., LLC, neither MMC, Merger Sub nor any of their respective
directors, officers or employees has incurred or will incur on behalf of MMC or
Merger Sub any brokerage, finders', advisory or similar fee in connection with
the transactions contemplated by this Agreement.
3.5. INFORMATION SUPPLIED. None of the information supplied or to be
supplied by MMC or Merger Sub specifically for inclusion or incorporation by
reference in the Proxy Statement will, at the date the Proxy Statement is mailed
to the Kroll Stockholders or at the time of the Kroll Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary, in order to make the statements
therein in light of the circumstances under which they are made, not misleading.
3.6. AVAILABLE FUNDS. MMC and Merger Sub (a) will have available to
them, as of the Effective Time, all funds necessary for the payment of the
Merger Consideration and all of their other obligations under this Agreement,
including with respect to the Kroll Options, the ESPP and all fees and expenses
related to the Merger and the transactions contemplated by this Agreement and
(b) as of the date hereof, have, or have access to, sufficient funds to satisfy
all of their obligations under this Agreement.
3.7. CAPITALIZATION OF MERGER SUB. As of the date of this Agreement,
the authorized capital stock of Merger Sub consists of (a) 100 shares of common
stock, par value $0.01 per share, all of which shares are validly issued and
outstanding, and (b) 100 shares of preferred stock, par value $0.01 per share,
none of which shares are issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective Time will be,
owned by MMC or a direct or indirect wholly-owned Subsidiary of MMC. Merger Sub
has not conducted any business prior to the date hereof and has no, and prior to
the Effective Time will have no, assets, liabilities or obligations of any
nature other than those incident to its formation and pursuant to this Agreement
and the Merger and the other transactions contemplated by this Agreement.
3.8. SECTION 203 OF THE DGCL. None of MMC, Merger Sub or their
respective affiliates constitutes an "interested stockholder" (as defined in
Section 203 of the DGCL) with respect to Kroll.
3.9. STATE TAKEOVER STATUTE. To MMC's knowledge, other than Section
203 of the DGCL, no other state takeover statute is applicable to the Merger.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF KROLL
In order to induce Merger Sub and MMC to enter into this Agreement,
Kroll hereby represents and warrants to MMC and Merger Sub that the statements
contained in this Article IV are true, correct and complete.
4.1. ORGANIZATION AND STANDING. Kroll is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with full corporate power and authority to own, lease, use and operate
its properties and to conduct its business as and where now owned, leased, used,
operated and conducted. Each of Xxxxx'x subsidiaries is an organization duly
incorporated, validly existing, and in good standing under the laws of its
jurisdiction of incorporation with full corporate power and authority to own,
lease, use and operate its properties and to conduct its business as and where
now owned, leased, used, operated and conducted, except for such failures by
inactive subsidiaries of Kroll to be in good standing as would not, individually
or in the aggregate, have or reasonably be expected to have a Material Adverse
Effect on Kroll. Each of Kroll and its subsidiaries is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of the
business conducted by it or the property it owns, leases or operates requires it
to so qualify, except where the failure to be so qualified or in good standing
in such jurisdiction would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect on Kroll. Kroll is not
in default in the performance, observance or fulfillment of any provision of the
Kroll Certificate or the Kroll Bylaws. Kroll has heretofore furnished to MMC
complete and correct copies of the Kroll Certificate and the Kroll Bylaws and
has furnished, or will furnish promptly after the date hereof, the certificates
of incorporation and bylaws or similar organizational documents for each of
Xxxxx'x subsidiaries.
4.2. SUBSIDIARIES. Kroll does not own (other than pursuant to the
acquisition of interests after the date hereof as permitted under this
Agreement), directly or indirectly, any equity or other ownership interest in
any corporation, partnership, joint venture or other entity or enterprise,
except for the subsidiaries set forth in Section 4.2 to the disclosure schedule
delivered by Kroll to MMC and dated the date of this Agreement (the "Kroll
Disclosure Schedule"). Except as set forth in Section 4.2 to the Kroll
Disclosure Schedule, Kroll is not subject to any obligation or requirement to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any such entity or any other person. Except as set
forth in Section 4.2 to the Kroll Disclosure Schedule, Kroll owns, directly or
indirectly, each of the outstanding shares of capital stock (or other ownership
interests having by their terms ordinary voting power to elect a majority of
directors or others performing similar functions with respect to such
subsidiary) of each of its subsidiaries. Each of the outstanding shares of
capital stock of each of Xxxxx'x subsidiaries is duly authorized, validly
issued, fully paid and nonassessable (to the extent there is any such concept),
and is owned, directly or indirectly, by Kroll (other than directors' qualifying
shares of certain foreign subsidiaries) free and clear of all liens, pledges,
security interests, claims or other encumbrances other than (a) restrictions
imposed by federal and state securities laws and (b) liens incurred in
connection with the Kroll Credit Agreement (as defined in Section 5.3(e)), which
liens shall be released prior to the Effective Time in accordance with Section
5.3(e). The following information for each of Xxxxx'x subsidiaries is set forth
in
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Section 4.2 to the Kroll Disclosure Schedule, as applicable: (a) its name and
jurisdiction of incorporation or organization; (b) its authorized capital stock
or share capital; and (c) the number of issued and outstanding shares of capital
stock or share capital and the record owner(s) thereof. Other than as set forth
in Section 4.2 to the Kroll Disclosure Schedule, there are no outstanding
subscriptions, options, warrants, puts, calls, agreements, understandings,
claims or other commitments or rights of any type relating to the issuance, sale
or transfer of any securities of any of Xxxxx'x subsidiaries, nor are there
outstanding any securities that are convertible into or exchangeable for any
shares of capital stock or other voting securities or ownership interests of any
of Xxxxx'x subsidiaries.
4.3. CORPORATE POWER AND AUTHORITY. Kroll has all requisite
corporate power and authority to enter into and deliver this Agreement, to
perform its obligations under this Agreement, and, subject to approval of this
Agreement and the transactions contemplated by this Agreement by the Kroll
Stockholders, to consummate the transactions contemplated by this Agreement. The
execution, performance and delivery of this Agreement by Kroll have been duly
authorized by all necessary corporate action on the part of Kroll, subject to
adoption of this Agreement and the transactions contemplated by this Agreement
by the Kroll Stockholders and no other corporate proceedings on the part of
Kroll are necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Kroll, and, assuming the due authorization, execution
and delivery by MMC and Merger Sub, constitutes the legal, valid and binding
obligation of Kroll enforceable against it in accordance with its terms except
that such enforceability (a) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (b) is subject to general principals of equity.
4.4. CAPITALIZATION OF KROLL.
(a) As of May 14, 2004 (the "Capitalization Date"), Xxxxx'x
authorized capital stock consisted solely of (i) 100,000,000 shares of Kroll
Common Stock, of which (A) 40,198,996 shares were issued and outstanding
(including 66,595 shares of unvested restricted stock issued under the Amended
and Restated 1998 Stock Incentive Plan), (B) 2,777,777 shares were issued and
held in treasury (which does not include the shares reserved for issuance set
forth in clause (C) below or the shares referred to in clause (D) below), (C)
6,429,326 shares were reserved for issuance upon the exercise of all outstanding
Kroll Options, (D) 7,768,864 shares were reserved for issuance upon the exercise
of conversion rights pursuant to all outstanding convertible debt instruments of
Kroll and its subsidiaries, and (E) 777,307 shares were reserved and available
for issuance under the ESPP; and (ii) 5,000,000 shares of preferred stock, par
value $0.01 per share, of which no shares were issued and outstanding or
reserved for future issuance under any agreement, arrangement or understanding.
As of the Capitalization Date, there were outstanding Kroll Options to purchase
an aggregate of 6,429,326 shares of Kroll Common Stock. Since the Capitalization
Date through the date hereof, (x) no capital stock of Kroll has been issued
except pursuant to the exercise or conversion of King Options or convertible
securities referred to in this Section 4.4(a) or in Section 4.4 of the KING
Disclosure Schedule and (y) no Kroll Options have been granted. As of the date
hereof, there are outstanding convertible debt instruments of Kroll convertible
into an aggregate maximum of 7,768,864 shares of Kroll Common Stock.
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(b) Other than as set forth in Section 4.4(a) of this Agreement and
on Section 4.4 of the Kroll Disclosure Schedule, (i) as of the Capitalization
Date there were no outstanding shares of Kroll capital stock or Kroll voting
securities, and (ii) there are no outstanding (A) subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or other commitments
or rights of any type to which Kroll is a party relating to the issuance, sale,
repurchase or transfer of any securities of Kroll, or (B) securities issued by
Kroll that are convertible into or exchangeable for any shares of Kroll capital
stock or Kroll voting securities, and neither Kroll nor any of its subsidiaries
has any obligation of any kind to issue any additional securities or to pay for,
repurchase, redeem or otherwise acquire any securities of Kroll or any of its
subsidiaries or any of their respective predecessors.
(c) None of Xxxxx'x subsidiaries owns any capital stock of Kroll.
Each outstanding share of Kroll capital stock is, and each share of Kroll
capital stock that may be issued will be, when issued, duly authorized and
validly issued, fully paid and nonassessable, and not subject to any preemptive
or similar rights. The issuance and sale of all of the shares of capital stock
described in this Section 4.4 have been in compliance in all material respects
with United States federal and state securities laws. Section 4.4 to the Kroll
Disclosure Schedule states the number of shares of Kroll Common Stock issuable
to each holder of Kroll Options as of the Capitalization Date, including the
exercise price and whether the Kroll Option is intended to qualify as an
"incentive stock option" (within the meaning of Section 422 of the Code).
4.5. CONFLICTS; CONSENTS AND APPROVALS. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
by this Agreement will:
(a) conflict with, or result in a breach of any provision of, the
Kroll Certificate or the Kroll Bylaws;
(b) except as set forth in Section 4.5(b) to the Kroll Disclosure
Schedule, violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event that, with the giving of notice,
the passage of time or otherwise, would constitute a default) under, or
entitle any person (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or call a default under, or
result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Kroll or any of its
subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, contract, undertaking,
agreement, lease or other instrument or obligation to which Kroll or any of
its subsidiaries is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Kroll or any of its subsidiaries or any of their
respective properties or assets (assuming receipt of all approvals and
consents set forth in Section 4.5(d)); or
(d) require any action or consent or approval of, or review by, or
registration or filing by Kroll or any of its affiliates with, any third
party or any Governmental Authority, other than (i) approval of this
Agreement and the transactions contemplated by this Agreement by Kroll
Stockholders, (ii) actions required by the HSR Act and Foreign Antitrust
Laws, (iii) registrations or other actions required under United States
federal
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and state securities laws, (iv) consents or approvals of any Governmental
Authority or third party set forth in Section 4.5 to the Kroll Disclosure
Schedule, and (v) the filing with the Delaware Secretary of State of the
Certificate of Merger;
other than in the case of Sections 4.5(b), 4.5(c) and 4.5(d) those exceptions
that would not, individually or in the aggregate, have or reasonably be expected
to have a Material Adverse Effect on Kroll.
4.6. BROKERAGE AND FINDERS' FEES; EXPENSES. Except for Xxxxx'x
obligations to Xxxxxxx, Xxxxx & Co. and Xxxxxx Xxxxxx & Co. Inc. (the amount of
such fee owed to each firm by Kroll in connection with the transactions
contemplated by this Agreement having been previously disclosed to MMC), neither
Kroll nor any director, officer, employee or subsidiary of Kroll, has incurred
or will incur on behalf of Kroll or its subsidiaries, any brokerage, finders',
advisory or similar fee in connection with the transactions contemplated by this
Agreement.
4.7. KROLL SEC DOCUMENTS.
(a) Kroll and its subsidiaries have timely filed with the
Commission all registration statements, prospectuses, forms, reports, schedules,
statements and other documents (as supplemented and amended since the time of
filing, collectively, the "Kroll SEC Documents") required to be filed by them
since January 1, 2002 under the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act") or the Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"). The Kroll SEC
Documents, including any financial statements or schedules included in the Kroll
SEC Documents, at the time filed (and, in the case of registration statements
and proxy statements, on the dates of effectiveness and the dates of mailing,
respectively, and, in the case of any Kroll SEC Document amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
amending or superseding filing (and, with respect to clause (i) of this sentence
only, only on such date)) (i) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) complied as to form in all
material respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be. The financial statements of Kroll and its
subsidiaries included in the Kroll SEC Documents (i) have been prepared from,
and are in accordance with, the books and records of Kroll and its subsidiaries,
(ii) at the time filed (and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of mailing,
respectively, and, in the case of any Kroll SEC Document amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
amending or superseding filing) complied as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the Commission with respect thereto, (iii) were prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto, or, in the case of unaudited statements, as
permitted by Form 10-Q of the Commission), and (iv) fairly present in all
material respects (subject, in the case of unaudited statements, to normal,
recurring audit adjustments and in the case of any Kroll SEC Document amended or
superseded by a filing prior to the date of this Agreement, such amending or
superseding filing) the consolidated financial position of Kroll
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and its consolidated subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended. None of
Xxxxx'x subsidiaries is subject to the periodic reporting requirements of the
Exchange Act or required to file (i) any form, report or other document with the
Commission or The Nasdaq National Market or (ii) any material form, report or
other document with any other stock exchange or securities regulatory authority.
(b) With respect to each Annual Report on Form 10-K and each
Quarterly Report on Form 10-Q included in the Kroll SEC Documents filed since
August 29, 2002, the financial statements and other financial information
included in such reports fairly present (within the meaning of the
Xxxxxxxx-Xxxxx Act of 2002) in all material respects the financial condition and
results of operations of Kroll as of, and for, the periods presented in the
Kroll SEC Documents. Since August 29, 2002, Xxxxx'x principal executive officer
and its principal financial officer have disclosed to Xxxxx'x auditors and the
audit committee of the Kroll Board (i) all significant deficiencies and material
weaknesses in the design or operation of internal controls over financial
reporting that could adversely affect Xxxxx'x ability to record, process,
summarize and report financial information and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in Xxxxx'x internal controls and Kroll has provided to MMC copies of any
written materials relating to the foregoing. Kroll has established and maintains
disclosure controls and procedures (as such term is defined in Rule 13a-14 under
the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to Kroll required to be included in
Xxxxx'x periodic reports under the Exchange Act, is made known to Xxxxx'x
principal executive officer and its principal financial officer by others within
those entities, and, to the knowledge of Kroll, such disclosure controls and
procedures are effective in timely alerting Xxxxx'x principal executive officer
and its principal financial officer to such material information required to be
included in Xxxxx'x periodic reports required under the Exchange Act. Except as
set forth in Section 4.7(b) to the Kroll Disclosure Schedule, there are no
outstanding loans made by Kroll or any of its subsidiaries to any executive
officer (as defined in Rule 3b-7 under the Exchange Act) or director of Kroll.
Since the enactment of the Xxxxxxxx-Xxxxx Act of 2002, neither Kroll nor any of
its subsidiaries has made any loans to any executive officer (as defined in Rule
3b-7 under the Exchange Act) or director of Kroll or any of its subsidiaries.
4.8. UNDISCLOSED LIABILITIES. Except (a) as and to the extent
disclosed or reserved against on the balance sheet (including the notes and
schedules thereto) of Kroll as of December 31, 2003 or as of March 31, 2004
included in the Kroll SEC Documents, (b) as incurred after March 31, 2004 in the
ordinary course of business consistent with prior practice, (c) as set forth in
Section 4.8 to the Kroll Disclosure Schedule or (d) as incurred in connection
with this Agreement or the transactions contemplated hereby, neither Kroll nor
any of its subsidiaries has any material liabilities or obligations of any
nature, whether known or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due, that would be required by GAAP to be reflected on
a consolidated balance sheet of Kroll and its subsidiaries (or disclosed in the
notes thereto).
4.9. INFORMATION SUPPLIED. At the date the Proxy Statement is mailed
to the Kroll Stockholders and at the time of the Kroll Stockholders Meeting, the
Proxy Statement will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary, in order
to make the statements therein in light of the
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circumstances under which they are made, not misleading. No representation or
warranty is made by Kroll with respect to statements or omissions included in
the Proxy Statement based upon information furnished to Kroll by or on behalf of
MMC or Merger Sub specifically for use therein. The Proxy Statement will comply
as to form in all material respects with the provisions of the Exchange Act.
4.10. COMPLIANCE WITH LAW. Kroll and its subsidiaries hold all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders of all Governmental
Authorities necessary for the lawful conduct of their respective businesses (the
"Kroll Permits"), except (a) as disclosed in the Kroll SEC Documents filed and
publicly available prior to the date hereof or (b) for failures to hold such
Kroll Permits that would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect on Kroll. Kroll and its
subsidiaries are in compliance with the terms of the Kroll Permits, except where
the failure so to comply would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect on Kroll. The
businesses of Kroll and its subsidiaries are not being conducted in violation of
any Applicable Law, except for violations that would not, individually or in the
aggregate, have or reasonably be expected to have a Material Adverse Effect on
Kroll. No investigation or review by any Governmental Authority with respect to
Kroll or any of its subsidiaries is, to the knowledge of Kroll, pending or
threatened, nor has any Governmental Authority given notice in writing of an
intention to conduct any such investigation or review, other than, in each case,
those the outcome of which would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect on Kroll.
4.11. LITIGATION. Except as disclosed in the Kroll SEC Documents
filed and publicly available prior to the date hereof or as set forth in Section
4.11 of the Kroll Disclosure Schedule (a) there is no suit, claim, action,
proceeding, hearing, notice of violation or demand letter (an "Action") pending,
or to the knowledge of Kroll, threatened, (or to the knowledge of Kroll any
pending or threatened investigation) against Kroll or any of its subsidiaries or
any executive officer or director of Kroll or any of its subsidiaries that
would, individually or in the aggregate, have or reasonably be expected to have
a Material Adverse Effect on Kroll, and (b) there is no outstanding order, writ,
injunction or decree against Kroll or any of its subsidiaries that would,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on Kroll.
4.12. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Since December 31, 2003, there has not been any Material
Adverse Effect on Kroll or any event, change, effect or development that would,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on Kroll.
(b) Except as disclosed in the Kroll SEC Documents filed and
publicly available prior to the date hereof, or as set forth in Section 4.12 to
the Kroll Disclosure Schedule, there has not been any action taken by Kroll or
any of its subsidiaries from March 31, 2004 through the date of this Agreement
that, if taken during the period from the date of this Agreement through the
Effective Time, would constitute a breach of Section 5.3(a)(iv), (v), (viii),
(ix) or (x).
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4.13. TAXES.
(a) Kroll and each of its subsidiaries has filed all material Tax
Returns (as defined in Section 4.13(b)) required to be filed by it. All such Tax
Returns were true, correct and complete in all material respects and Kroll and
each of its subsidiaries has paid or caused to be paid all material Taxes in
respect of the periods covered by such Tax Returns. Each of Kroll and its
subsidiaries has timely withheld and paid all material Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, shareholder or other third party. Except as
set forth in Section 4.13 of the Kroll Disclosure Schedule, neither Kroll nor
any of its subsidiaries is currently the beneficiary of any extension of time
within which to file any material Tax Return. There are no material security
interests on any of the assets of Kroll or any of its subsidiaries that arose in
connection with any failure to pay any Tax when due (taking into account
relevant extensions), except with respect to such Taxes that are being contested
in good faith by appropriate proceedings and for which appropriate reserves have
been established in accordance with GAAP. There is no claim or dispute
concerning any material Tax liability of Kroll or its subsidiaries claimed or
raised by any Governmental Authority in writing. No issue has been raised in
writing in any examination by any Governmental Authority with respect to Kroll
or any subsidiary which, by application of similar principles, reasonably could
be expected to result in a proposed material increase in Tax, in excess of that
provided for in any reserve for Taxes, for any other period not so examined.
Except as set forth in Section 4.13 of the Kroll Disclosure Schedule, all income
Tax Returns required to be filed by or with respect to Kroll or any of its
subsidiaries through the year 1999 have been examined by the Internal Revenue
Service or other appropriate taxing authority and the examination concluded, or
are Tax Returns with respect to which the period during which any assessments
may be made by the Internal Revenue Service or other appropriate taxing
authority has expired (taking into account any extension or waiver thereof). All
material deficiencies and assessments asserted as a result of such examinations
or other audits by federal, state, local or foreign taxing authorities have been
paid, fully settled or adequately provided for in Xxxxx'x financial statements
in accordance with GAAP, and no issue or claim has been asserted in writing for
material Taxes by any taxing authority for any prior period, other than those
heretofore paid or properly provided for in Xxxxx'x financial statements. Except
as set forth in Section 4.13 of the Kroll Disclosure Schedule, there are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any material Tax Return of Kroll or any of its subsidiaries.
Except as set forth in Section 4.13 to the Kroll Disclosure Schedule, neither
Kroll nor any of its subsidiaries (i) has been a member of a group filing
consolidated returns for federal income Tax purposes (except for the group of
which Kroll is the common parent), (ii) has any liability for the Taxes of any
person (other than Kroll and its subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferor or successor, by contract or otherwise, or (iii) is a party to a Tax
sharing or Tax indemnity agreement or any other agreement of a similar nature
involving a material amount of Taxes that remains in effect. Kroll has not
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock intended to qualify for tax-free treatment under Section 355 of the Code.
Kroll has not been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code.
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(b) "Tax Returns" means returns, reports and forms required to be
filed with any Governmental Authority of the United States or any other relevant
jurisdiction responsible for the imposition or collection of Taxes.
(c) "Taxes" means (i) all taxes (whether United States federal,
state or local or foreign) based upon or measured by income and any other tax
whatsoever, including gross receipts, profits, sales, use, occupation, value
added, ad valorem, transfer, franchise, withholding, payroll, employment,
excise, or property taxes, together with any interest or penalties imposed with
respect thereto and (ii) any obligations under any agreements or arrangements
with respect to any taxes described in clause (i) above.
4.14. INTELLECTUAL PROPERTY.
(a) For purposes of this Agreement, (i) "Intellectual Property
Right" means any trademark, service xxxx, trade name, mask work, invention,
patent, trade secret, copyright, know-how or proprietary information contained
on any website, processes, formulae, products, technologies, discoveries,
apparatus, Internet domain names, trade dress and general intangibles of like
nature (together with goodwill), customer lists, confidential information,
licenses, software, databases and compilations including any and all collections
of data and all documentation thereof (including any registrations or
applications for registration of any of the foregoing) or any other similar type
of proprietary intellectual property right, and (ii) "Kroll Intellectual
Property Right" means all Intellectual Property Rights owned or licensed by
Kroll or any of its subsidiaries as of the date hereof that are used or held for
use by Kroll or any of its subsidiaries.
(b) Kroll and its subsidiaries own, or are validly licensed or
otherwise have the right to use, all Intellectual Property Rights used in the
conduct of their businesses, except where the failure to own or possess valid
rights to such Intellectual Property Rights would not, individually or in the
aggregate, have or reasonably be expected to have a Material Adverse Effect on
Kroll. No Kroll Intellectual Property Right is subject to any outstanding
judgment, injunction, order, decree or agreement restricting the use thereof by
Kroll or any of its subsidiaries or restricting the licensing thereof by Kroll
or any of its subsidiaries to any Person (as defined in Section 5.3(b)(i)),
except for (i) any restrictions imposed under those agreements pursuant to which
the Kroll Intellectual Property Right is licensed, and (ii) any judgment,
injunction, order, decree or agreement which would not, individually or in the
aggregate, have or reasonably be expected to have a Material Adverse Effect on
Kroll. Except as set forth in Section 4.14 of the Kroll Disclosure Schedule,
neither Kroll nor any of its subsidiaries is infringing on any other Person's
Intellectual Property Rights and to the knowledge of Kroll no Person is
infringing on any Kroll Intellectual Property Rights, except, in either case, as
would not, individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect on Kroll. Except for such matters as would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on Kroll, (i) neither Kroll nor any of its subsidiaries
is a defendant in any action, suit, governmental investigation or proceeding
relating to, or otherwise was notified in writing of, any claim alleging
infringement by Kroll or any of its subsidiaries of any Intellectual Property
Right and (ii) Kroll and its subsidiaries have no pending claim or suit for any
continuing infringement by any other Person of any Kroll Intellectual Property
Rights.
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4.15. EMPLOYEE BENEFIT PLANS.
(a) For purposes of this Section 4.15, the following terms have the
definitions given below:
(i) "Controlled Group Liability" means any and all
liabilities (A) under Title IV of ERISA (as defined in Section 4.15(a)(ii)), (B)
under Section 302 of ERISA, (C) under Sections 412 and 4971 of the Code, (D)
resulting from a violation of the continuation coverage requirements of Section
601 et seq. of ERISA and Section 4980B of the Code or the group health plan
requirements of Sections 601 et seq. of the Code and Section 601 et seq. of
ERISA and (E) under corresponding or similar provisions of foreign laws or
regulations.
(ii) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, together with the rules and regulations thereunder.
(iii) "ERISA Affiliate" means, with respect to any entity,
trade or business, any other entity, trade or business that is a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
(iv) "Plans" means all employee benefit plans, programs and
other arrangements providing benefits to any employee or former employee in
respect of services provided to Kroll or any of its subsidiaries or to any
beneficiary or dependent thereof, and whether covering one individual or more
than one individual, sponsored or maintained by Kroll or any of its subsidiaries
or to which Kroll or any of its subsidiaries contributes or is obligated to
contribute or could have any liability. Without limiting the generality of the
foregoing, the term "Plans" includes any defined benefit or defined contribution
pension plan, profit sharing plan, stock ownership plan, deferred compensation
agreement or arrangement, vacation pay, health, sickness, life, disability or
death benefit plan (whether provided through insurance, on a funded or unfunded
basis or otherwise), employee stock option or stock purchase plan, bonus or
incentive plan or program, severance pay plan, agreement, arrangement or policy
(including statutory severance and termination indemnity plans), practice or
agreement, employment agreement, retiree medical benefits plan and each other
employee benefit plan, program or arrangement including each "employee benefit
plan" (within the meaning of Section 3(3) of ERISA).
(b) Section 4.15(b) to the Kroll Disclosure Schedule lists all
material Plans and indicates those Plans that are subject to the laws of any
jurisdiction outside the United States. With respect to each material Plan,
Kroll has provided or will provide, promptly after the date hereof, to MMC a
true, correct and complete copy of the following (where applicable): (i) each
writing constituting a part of such Plan, including, without limitation, all
plan documents (including amendments), benefit schedules, trust agreements, and
insurance contracts and other funding vehicles; (ii) the two most recent Annual
Reports (Form 5500 Series) and accompanying schedules, if any; (iii) the current
summary plan description, if any; (iv) the most recent annual financial report,
if any; (v) the two most recent actuarial valuations for any defined pension
benefit plans; (vi) any material notices provided either to any participants in
any Plan or to any
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Governmental Authority relative to any Plan in the past five years; and (vii)
the most recent determination letter from the Internal Revenue Service, if any.
Except as specifically provided in the foregoing documents, there are no
amendments to any Plan that have been adopted or approved, nor has Kroll or any
of its subsidiaries undertaken to make any such amendments or to adopt or
approve any new Plan.
(c) The Internal Revenue Service has issued a favorable
determination letter with respect to each Plan that is intended to be a
"qualified plan" (within the meaning of Section 401(a) of the Code) (a
"Qualified Plan"), and all applicable foreign qualifications or registration
requirements have been satisfied in all material respects with respect to any
Plan maintained outside the United States and any failure to comply with such
qualifications or requirements would not result in a material liability to Kroll
or its subsidiaries. To the knowledge of Kroll, there are no existing
circumstances nor any events that have occurred that would reasonably be
expected to adversely affect the qualified status of any Qualified Plan or the
related trust or the qualified or registered status of any Plan or trust
maintained outside the United States.
(d) All material contributions required to be made by Kroll or any
of its subsidiaries or any of their respective ERISA Affiliates to any Plan
(including any Plan subject to the laws of any jurisdiction outside the United
States) by Applicable Laws or by the terms of any Plan and all material premiums
due or payable with respect to insurance policies funding any Plan, for any
period through the date hereof have been timely made or paid in full or, to the
extent not yet due, have been adequately accrued on Xxxxx'x financial statements
in accordance with GAAP.
(e) Except as set forth in Section 4.15 to the Kroll Disclosure
Schedule, Kroll and its subsidiaries and their respective ERISA Affiliates have
complied, and are now in compliance with all provisions of ERISA, the Code and
all laws and regulations (including any local Applicable Laws) applicable to the
Plans in all material respects. Each Plan has been operated in compliance with
its terms in all material respects. There is not now, and to the knowledge of
Kroll there are no existing circumstances that would reasonably be expected to
give rise to, any requirement for the posting of security with respect to a Plan
or the imposition of any pledge, lien, security interest or encumbrance on the
assets of Kroll or any of its subsidiaries or any of their respective ERISA
Affiliates under ERISA or the Code, or similar Applicable Laws of foreign
jurisdictions.
(f) No Plan is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code. No Plan is a "multiemployer plan" (within the
meaning of Section 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a plan that
has two or more contributing sponsors at least two of whom are not under common
control (within the meaning of Section 4063 of ERISA) (a "Multiple Employer
Plan"), nor has Kroll or any of its subsidiaries or any of their respective
ERISA Affiliates, at any time within six years before the date of this
Agreement, contributed to or been obligated to contribute to any Multiemployer
Plan or Multiple Employer Plan.
(g) Except as would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect, there does not now
exist, and there are no existing circumstances that would reasonably be expected
to result in, any Controlled Group Liability that would be a liability of Kroll
or any of its subsidiaries following the Closing.
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Without limiting the generality of the foregoing, neither Kroll nor any of its
subsidiaries nor any of their respective ERISA Affiliates has engaged in any
transaction described in Section 4069 or 4212(c) of ERISA.
(h) Except for health continuation coverage as required by Section
4980B of the Code or Part 6 of Title I of ERISA and except as set forth in
Section 4.15(h) to the Kroll Disclosure Schedule, neither Kroll nor any of its
subsidiaries has any material liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or dependents thereof.
Except as would not result in material liability, there has been no written
communication to employees of Kroll or its subsidiaries that promises or
guarantees such employees retiree health or life insurance benefits or other
retiree death benefits on a permanent basis.
(i) Except as disclosed in Section 4.15(i) to the Kroll Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will result in,
cause the accelerated vesting or delivery of, or increase the amount or value
of, any payment or benefit to any employee, officer, director or consultant of
Kroll or any of its subsidiaries (either alone or in conjunction with any other
event) under any Plan.
(j) Except as disclosed in Section 4.15(j) to the Kroll Disclosure
Schedule, there are no pending, or, to the knowledge of Kroll, threatened,
Actions (or to the knowledge of Kroll any pending or threatened investigations)
(other than claims for benefits in the ordinary course) that have been asserted
or instituted against any Plan, any fiduciaries thereof with respect to their
duties to any Plan or the assets of any of the trusts under any Plan that could
reasonably be expected to result in any material liability of Kroll or any of
its subsidiaries to the Pension Benefit Guaranty Corporation, the United States
Department of Treasury, the United States Department of Labor or any
Multiemployer Plan, or to comparable entities or Plans under Applicable Laws of
jurisdictions outside the United States.
(k) Except as would not be expected to result in any material
liability to Kroll, no disallowance of a deduction under Section 162(m) of the
Code for employee reimbursement or compensation of any amount paid or payable by
Kroll or any of its subsidiaries has occurred within the last three fiscal years
of Kroll.
(l) Except as set forth in Section 4.15 to the Kroll Disclosure
Schedule, Kroll and its subsidiaries have in the past been and are in compliance
in all material respects with Applicable Laws with respect to employment,
employment practices, employee and independent contractor classification, labor
relations, safety and health, wages, hours and terms and conditions of
employment. Except as set forth in Section 4.15 to the Kroll Disclosure
Schedule, Kroll and its subsidiaries have complied with their payment
obligations to all employees of Kroll and its subsidiaries in respect of all
wages, salaries, commissions, bonuses, benefits and other compensation due and
payable to such employees under each Kroll policy, practice, agreement, plan,
program or Applicable Laws in all material respects.
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4.16. CONTRACTS; INDEBTEDNESS.
(a) Except as set forth in Section 4.16(a) of the Kroll Disclosure
Schedule or listed as an exhibit to the Kroll SEC Documents filed and publicly
available prior to the date hereof (together, the "Material Contracts"), neither
Kroll nor any of its subsidiaries is a party to, and none of their respective
properties or assets are bound by, any "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the Commission). Each such
Material Contract is a valid, binding and enforceable obligation of Kroll or its
subsidiaries and, to Xxxxx'x knowledge, of the other party or parties thereto,
in accordance with its terms, and in full force and effect, except (i) where the
failure to be valid, binding, enforceable and in full force and effect would
not, individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on Kroll and (ii) to the extent as may be limited by
applicable bankruptcy, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights generally or by general principles of equity.
Kroll has not received any written notice from any other party to any such
Material Contract, and otherwise has no knowledge that such third party intends
to terminate, or not renew, any such Material Contract. As of the date hereof,
all Material Contracts are either publicly filed with the Commission or Kroll
has made, or will make promptly after the date hereof, true and correct copies
of such contracts available to MMC. Neither Kroll nor any of its subsidiaries,
and, to the knowledge of Kroll, no other party thereto, is in violation of or in
default under any Material Contract (nor does there exist any condition which
upon the passage of time or the giving of notice or both would cause such a
violation of or default thereunder by Kroll or, to Xxxxx'x knowledge, by any
third party), except for violations or defaults that would not, individually or
in the aggregate, have or reasonably be expected to have a Material Adverse
Effect on Kroll.
(b) Except as disclosed in the Kroll SEC Documents filed and
publicly available prior to the date hereof, or as set forth in Section 4.16(b)
of the Kroll Disclosure Schedule, neither Kroll nor any of its subsidiaries is a
party to or otherwise bound by (i) any agreement containing covenants purporting
to limit in a manner that is material to Kroll and its subsidiaries taken as a
whole the freedom of Kroll or any of its subsidiaries to compete in any line of
business or sell, supply or distribute any service or product, in each case, in
any geographic area or to hire any individual or group of individuals, (ii) any
agreement that, after the Effective Time, would have the effect of limiting in
any material respect the freedom of MMC or any of its subsidiaries (other than
Kroll and its subsidiaries) to compete in any line of business or sell, supply
or distribute any product or service, in each case, in any geographic area or to
hire any individual or group of individuals, or (iii) any acquisition agreement
containing "earn-out" or other contingent payment obligations that could result
in payments by Kroll or any of its subsidiaries after the date hereof in
aggregate amounts, with respect to a particular agreement, in excess of $2.5
million.
(c) Section 4.16(c) of the Kroll Disclosure Schedule sets forth (i)
a list, as of the date hereof, of each agreement, instrument and other
obligation pursuant to which any indebtedness for borrowed money of Kroll or any
of its subsidiaries in an aggregate principal amount in excess of $5 million is
outstanding and (ii) as of March 31, 2004, the respective principal amounts
outstanding thereunder, which principal amount outstanding shall, other than
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with respect to any revolving credit facilities or lines of credit, be equal to
or less than such amount as of the date of this Agreement.
4.17. LABOR MATTERS.
(a) Except as set forth in Section 4.17 to the Kroll Disclosure
Schedule, neither Kroll nor any of its subsidiaries has any labor contracts or
collective bargaining agreements with any persons employed by Kroll or any of
its subsidiaries or any persons otherwise performing services primarily for
Kroll or any of its subsidiaries. There is no labor strike, dispute or stoppage
pending, or, to the knowledge of Kroll or any of its subsidiaries, threatened,
against Kroll or any of its subsidiaries, and neither Kroll nor any of its
subsidiaries has experienced any labor strike, dispute or stoppage or other
material labor difficulty involving its employees since January 1, 2002. To the
knowledge of Kroll or any of its subsidiaries, since January 1, 2002, no
campaign or other attempt for recognition has been made by any labor
organization or employees with respect to employees of Kroll or any of its
subsidiaries. Neither Kroll nor any of its subsidiaries is engaged in any unfair
labor practice.
(b) As of the date hereof, no executive officer or employee of
Kroll earning in excess of $300,000 per year or any of its subsidiaries has
given written notice to Kroll or any of its subsidiaries that any such employee
intends to terminate his or her employment with Kroll or any of its
subsidiaries.
4.18. CUSTOMER/SUPPLIER RELATIONSHIPS. Except as set forth in Section
4.18 to the Kroll Disclosure Schedule, since December 31, 2003, Kroll has not
received written notice from (a) any customer of Kroll or any of its
subsidiaries that it will stop or decrease purchasing services, materials or
products from Kroll or such subsidiary to an extent that would be material to
Kroll and its subsidiaries taken as a whole, or (b) any supplier or service
provider of Kroll or any of its subsidiaries that it will stop or decrease the
supply of materials, products or services to Kroll or such subsidiary to an
extent that would be material to Kroll and its subsidiaries taken as a whole. In
addition, to the knowledge of Kroll, no customer or supplier described in clause
(a) or (b) above is otherwise involved in a dispute with Kroll or any of its
subsidiaries that is material to Kroll and its subsidiaries taken as a whole.
Section 4.18 of the Kroll Disclosure Schedule describes each termination or
nonrenewal that has occurred during the 2003 calendar year with respect to any
contract with any customer or supplier involving payments in excess of $5.0
million per year. Section 4.18 of the Kroll Disclosure Schedule also describes
each termination or nonrenewal that has occurred between January 1, 2004 and the
date of this Agreement with respect to any contract with any customer or
supplier involving payments reasonably expected to be in excess of $5.0 million
for the 2004 calendar year.
4.19. ENVIRONMENTAL MATTERS. Except as set forth in Section 4.19 to
the Kroll Disclosure Schedule and for such matters as would not, individually or
in the aggregate, have or reasonably be expected to have a Material Adverse
Effect on Kroll: (a) the properties, operations and activities of Kroll and its
subsidiaries are in compliance with all applicable Environmental Laws (as
defined below) and Environmental Permits (as defined below); (b) Kroll and its
subsidiaries and the properties and operations of Kroll and its subsidiaries are
not subject to any existing, pending or, to the knowledge of Kroll, threatened,
Action (or to the knowledge of Kroll any pending or threatened investigation) by
or before any Governmental Authority under any
-23-
Environmental Laws; and (c) there has been no release of any Hazardous Material
(as defined below) into the environment by Kroll or its subsidiaries or in
connection with their current or former properties or operations. Except for
such matters as would not, individually or in the aggregate, have or reasonably
be expected to have a Material Adverse Effect on Kroll, or as set forth on
Section 4.19 to the Kroll Disclosure Schedule, Kroll has no knowledge of any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans which would reasonably be expected to
give rise to liability to Kroll or its subsidiaries under, or prevent compliance
or continued compliance by Kroll or its subsidiaries with, any Environmental
Laws. "Environmental Laws" means all United States federal, state or local or
foreign laws relating to pollution or protection of human health or the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata), including laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or industrial,
toxic or hazardous substances or wastes (collectively, "Hazardous Materials")
into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials. "Environmental Permit" means any permit, approval, grant,
consent, exemption, certificate order, easement, variance, franchise, license or
other authorization required under or issued pursuant to any applicable
Environmental Laws.
4.20. INSURANCE. Section 4.20 of the Kroll Disclosure Schedule sets
forth a list of all material insurance policies maintained by Kroll or any of
its subsidiaries which policies have been issued by insurers, which are
reputable and provide coverage for the operations conducted by Kroll and its
subsidiaries of a scope and coverage consistent with customary industry
practice.
4.21. OPINION OF FINANCIAL ADVISOR. The Kroll Board has received the
oral opinion (to be subsequently confirmed in writing) of Xxxxxxx, Xxxxx & Co.,
Xxxxx'x financial advisor, dated as of the date of this Agreement, to the effect
that, as of the date of this Agreement, the Merger Consideration to be received
by the Kroll Stockholders pursuant to this Agreement is fair to the Kroll
Stockholders from a financial point of view. Kroll shall provide a complete and
correct signed copy of such opinion to MMC as soon as practicable after the date
of this Agreement.
4.22. BOARD RECOMMENDATION; REQUIRED VOTE. The Kroll Board, at a
meeting duly called and held, has, by unanimous vote of those directors present
(who constituted 100% of the directors then in office), (a) determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
advisable, fair to and in the best interests of the Kroll Stockholders; (b)
declared advisable and in all respects approved and adopted this Agreement, and
the transactions contemplated by this Agreement, including the Merger; and (c)
resolved to recommend that the Kroll Stockholders approve and adopt this
Agreement and the Merger (the "Kroll Board Recommendation"), PROVIDED that any
withdrawal, modification or qualification of such recommendation in accordance
with Section 1.6(c) shall not be deemed a breach of this representation. The
affirmative vote of holders of a majority of the outstanding shares of Kroll
Common Stock to adopt this Agreement and the Merger is the only vote of the
holders of any class or series of capital stock of Kroll necessary to adopt this
Agreement and approve the transactions contemplated by this Agreement, including
the Merger.
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4.23. SECTION 203 OF THE DGCL. Prior to the date of this Agreement,
the Kroll Board has taken all action necessary, assuming the accuracy of the
representation given by MMC and Merger Sub in Section 3.8, so that the
restrictions on business combinations contained in Section 203 of the DGCL will
not apply with respect to or as a result of this Agreement, the Support
Agreement or the transactions contemplated hereby or thereby, including the
Merger, without any further action on the part of the Kroll Stockholders or the
Kroll Board. To Xxxxx'x knowledge, no other state takeover statute is applicable
to the Merger.
ARTICLE V
COVENANTS OF THE PARTIES
The parties hereto agree that:
5.1. MUTUAL COVENANTS.
(a) REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, Kroll and MMC will use (and will cause their respective
subsidiaries to use) their reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under this Agreement or Applicable Law to consummate and make
effective as soon as reasonably practicable, the Merger and the other
transactions contemplated by this Agreement, including working together to
ensure a smooth transition with respect to, and to maintain existing
relationships with, employees, customers and suppliers of Kroll and its
subsidiaries.
(b) HSR ACT.
(i) Kroll and MMC shall, promptly after the execution and
delivery of this Agreement, file with the Federal Trade Commission and the
Department of Justice the notification required to be filed with respect to the
transactions provided in this Agreement under the HSR Act (and request early
termination of the waiting period) and shall file promptly with the appropriate
Governmental Authorities all notifications required under applicable Foreign
Antitrust Laws. Each of Kroll and MMC shall, in connection therewith, cooperate
as necessary to promptly amend such filings or supply additional information and
documentary material as may be requested pursuant to the HSR Act or Foreign
Antitrust Laws.
(ii) Each party hereto, through outside counsel, will (A)
promptly notify every other party hereto of any written communication to that
party from any Governmental Authority concerning this Agreement or the
transactions contemplated hereby and, if practicable, permit each other party's
counsel to review in advance any proposed written communication to any such
Governmental Authority concerning this Agreement or the transactions
contemplated hereby and incorporate each other party's reasonable comments; (B)
not agree to participate in any substantive meeting or discussion with any such
Governmental Authority in respect of any filing, investigation or inquiry
concerning this Agreement or the transactions contemplated hereby unless it
consults with each other party's counsel in advance, and, to the extent
permitted by such Governmental Authority, gives each other party the opportunity
to attend and (C) furnish to each other party's counsel copies of all
correspondence,
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filings, and written communications between them and their respective
representatives on the one hand, and any such Governmental Authority or its
respective staff on the other hand, with respect to this Agreement or the
transactions contemplated hereby.
(c) PUBLIC ANNOUNCEMENTS. MMC and Kroll will consult with each
other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby and, except as
may be required by Applicable Law or any listing agreement with any national
securities exchange, will not issue any such press release or make any such
public statement prior to such consultation.
(d) CONVEYANCE TAXES. Kroll and MMC shall cooperate in the
preparation, execution and filing of all Tax Returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar Taxes that become
payable in connection with the transactions contemplated by this Agreement that
are required or permitted to be filed on or before the Effective Time.
(e) NOTICE OF CERTAIN EVENTS. Each of the Kroll and MMC shall
promptly notify the other of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement if such consent would be
material to such transactions;
(ii) any material notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this
Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced after the date hereof or, to its knowledge, threatened
after the date hereof against, relating to or involving or otherwise affecting
Kroll, MMC or any of their respective subsidiaries that relate to the
consummation of the transactions contemplated by this Agreement, including the
Merger.
5.2. COVENANTS OF MMC.
(a) INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(i) All rights to indemnification and exculpation from
liability for acts or omissions occurring at or prior to the Effective Time and
rights to advancement of expenses relating thereto now existing in favor of the
current or former directors or officers of Kroll and its subsidiaries (such
persons, "Indemnified Persons"), as provided in their respective certificates of
incorporation or by-laws (or comparable organizational documents) and any
existing indemnification agreements or arrangements of Kroll or any of its
subsidiaries listed on Schedule 5.2(a)(i) of the Kroll Disclosure Schedule shall
survive the Merger and shall not be amended, repealed or otherwise modified in
any manner. The Surviving Corporation shall cooperate in the defense of any such
matter. From and after the Effective Time, MMC shall cause the Surviving
Corporation to indemnify, defend and hold harmless and advance expenses, to the
fullest extent permitted by the DGCL and other Applicable Laws, the present and
former officers and directors
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of Kroll or any of its subsidiaries in their capacities as such against all
losses, expenses, claims, damages or liabilities arising out of the actions or
omissions relating to the transactions contemplated hereby.
(ii) MMC shall or shall cause the Surviving Corporation to
obtain and maintain in effect, including through its existing insurance program,
for a period of not less than six years after the Effective Time, policies of
directors' and officers' liability insurance on behalf of the officers and
directors of Kroll currently covered by Xxxxx'x directors' and officers'
liability insurance policy with respect to acts or omissions occurring prior to
the Effective Time with substantially the same coverage and containing terms and
conditions not less advantageous in the aggregate to those officers and
directors than the coverage and terms and conditions of Xxxxx'x existing
directors' and officers' policy; PROVIDED, HOWEVER, that if the aggregate annual
premiums for such insurance at any time during such period shall exceed 200% of
the per annum rate of premium paid by Kroll and its subsidiaries as of the date
hereof for such insurance, then MMC shall or shall cause its subsidiaries to,
provide only such coverage as shall then be available at an annual premium equal
to 200% of such rate.
(iii) The parties agree that the provisions of this Section
5.2(a) are (A) intended to be for the benefit of, and shall be enforceable by,
each Indemnified Person and each Indemnified Person's heirs and representatives
and (B) in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise. The parties agree that in the event that the Surviving Corporation or
any of its successors or assigns (x) consolidates with or merges into any other
person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (y) transfers or conveys all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made by such person so that the successors and assigns of the
Surviving Corporation assume the obligations of the parties and the Surviving
Corporation set forth in this Section. In the event that the Surviving
Corporation transfers any material portion of its assets, in a single
transaction or in a series of transactions, MMC shall take such action as may be
necessary to ensure that the ability of the Surviving Corporation, legal and
financial, to satisfy the indemnification obligations set forth in this Section
will not be diminished in any material respect.
(b) EMPLOYEES AND EMPLOYEE BENEFITS.
(i) MMC will cause the Surviving Corporation to honor the
obligations of Kroll and any of its subsidiaries as of the Effective Time under
the provisions of all Plans and employment agreements to which Kroll is a party,
PROVIDED that this provision shall not prevent the Surviving Corporation from
amending, suspending or terminating any such Plans or employment agreements to
the extent permitted by the applicable terms of such Plan or employment
agreement.
(ii) For 18 months following the Effective Time, MMC shall
provide Kroll employees with a comprehensive employee benefits program
substantially similar in the aggregate to employee benefits currently provided
to Kroll Employees. For purposes of this Section 5.2(b), "Kroll Employees" means
individuals who are, as of the Effective Time,
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employees of Kroll not subject to collective bargaining agreements and who
following the Effective Time continue such employment with Kroll, MMC or their
respective subsidiaries.
5.3. COVENANTS OF KROLL.
(a) CONDUCT OF XXXXX'X OPERATIONS. From the date hereof until the
Effective Time, except as contemplated by this Agreement, Kroll shall and shall
cause each of its subsidiaries to conduct its business and operate its
properties in the ordinary course of business substantially consistent with past
practice and Kroll shall and shall cause each of its subsidiaries to use its
reasonable best efforts to preserve intact its business organization and
relationships with third parties and to keep available the services of its
present officers and employees. Without limiting the generality of the
foregoing, except with the prior written consent of MMC or as contemplated by
this Agreement or as set forth in the Kroll Disclosure Schedule, from the date
hereof until the Effective Time, Kroll shall not:
(i) do or effect any of the following actions with respect
to its securities or the securities of its subsidiaries: (A) adjust, split,
combine or reclassify Kroll capital stock or that of its subsidiaries, (B) make,
declare or pay any dividend or distribution on (other than dividends or
distributions by a direct or indirect wholly owned subsidiary of Kroll to its
parent), or, directly or indirectly, redeem, purchase or otherwise acquire, any
shares of Kroll capital stock or that of its subsidiaries or any securities or
obligations convertible into or exchangeable for any shares of Kroll capital
stock or that of its subsidiaries, (C) grant any person any right or option to
acquire any shares of Kroll capital stock or that of its subsidiaries or any
other equity-based compensation award based on shares of Kroll capital stock or
that of its subsidiaries, (D) issue, deliver, sell, pledge or encumber or agree
to issue, deliver, sell, pledge or encumber any shares of Kroll capital stock or
any securities or obligations convertible into or exchangeable or exercisable
for any shares of Kroll capital stock or such securities (except pursuant to (1)
the exercise of Kroll Options that are outstanding as of the date of this
Agreement and in accordance with the existing terms of such Kroll Options, (2)
the vesting of any restricted stock outstanding as of the date of this
Agreement, (3) issuances of shares of Kroll Common Stock under the ESPP or (4)
issuances of shares of Kroll Common Stock upon conversion of convertible notes
outstanding as of the date of this Agreement) or the capital stock or such
securities of its subsidiaries, or (E) enter into any agreement, understanding
or arrangement with respect to the sale, voting, registration or repurchase of
Kroll capital stock or that of its subsidiaries;
(ii) directly or indirectly, sell, transfer, lease, pledge,
mortgage, encumber or otherwise dispose of its property or assets (including
stock or other ownership interests of its subsidiaries) (collectively,
"Transfers"), other than (A) Transfers in the ordinary course of business
consistent with past practice, and (B) Transfers of property and/or assets with
a fair market value not greater than $2.0 million individually and $5.0 million
in the aggregate;
(iii) make or propose any changes in the Kroll Certificate
or the Kroll Bylaws or the organizational documents of any subsidiary;
(iv) (A) merge or consolidate with any other person or (B)
adopt a plan of complete or partial liquidation, dissolution, recapitalization
or other reorganization, other than,
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with respect to clause (A), mergers or consolidations consummated to effectuate
an acquisition pursuant to clause (v) immediately below;
(v) acquire assets or capital stock of any other person,
other than acquisitions for consideration not in excess of $5.0 million
individually or $10.0 million in the aggregate;
(vi) incur, create, assume or otherwise become liable for
any indebtedness for borrowed money or assume, guarantee, endorse or otherwise
become responsible or liable for the obligations of any other individual,
corporation or other entity (not including direct or indirect wholly owned
subsidiaries of Kroll), other than in the ordinary course of business,
consistent with past practice, and not, in any case, in an aggregate amount in
excess of $5.0 million;
(vii) (A) create any subsidiaries, other than, with respect
to this clause (A), as permitted pursuant to clauses (iv) and (v) above or (B)
alter through merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any of its existing
subsidiaries, other than, with respect to this clause (B), in connection with
the winding up of inactive subsidiaries of Kroll;
(viii) (A) establish, or increase compensation or benefits
provided under, any stay bonus, incentive, insurance, severance, termination,
change of control, deferred compensation, pension, retirement, profit sharing,
stock option (including, without limitation, the granting or repricing of stock
options, stock appreciation rights, performance awards, restricted stock awards
or similar instruments), stock purchase or other employee benefit plan, program,
policy, or agreement or arrangement, except for increases to base salary in the
ordinary course of business consistent with past practices for employees of
Kroll who earn less than $250,000 per year and other than as provided in clause
(D) below, (B) except as otherwise provided in Section 2.3(a), otherwise
increase or accelerate the vesting or payment of the compensation payable or the
benefits provided or to become payable or provided to any of its current or
former directors, officers, employees, consultants or service providers or those
of any subsidiary, or otherwise pay any amounts not due such individual,
including without limitation, with respect to severance, (C) enter into any new
or amend any existing employment or consulting agreement with any director or
officer of Kroll or any individual listed on Section 5.3(a)(viii) of the Kroll
Disclosure Schedule (such directors, officers and individuals, taken together,
the "Key Kroll Individuals"), (D) without the prior written consent of MMC (not
to be unreasonably withheld or delayed), enter into any new or amend any
existing employment or consulting agreement with any employee, consultant or
service provider or hire or retain the services of any such person if the
compensation (base salary and any guaranteed and/or signing bonuses) shall
exceed $250,000, provided that this clause (D) shall not apply to the Key Kroll
Individuals, or (E) establish, adopt or enter into any collective bargaining
agreement, except in each of clauses (A), (B), and (E) as may be required to
comply with Applicable Law, any Plans or existing contractual arrangements;
(ix) except as permitted under clause (viii) above or as
contemplated by this Agreement, enter into, adopt or amend in any manner which
would increase costs or benefits thereunder, any Plan (or any new arrangement
that would constitute a Plan), except as shall be required by Applicable Laws;
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(x) change in any material respect any method or principle
of Tax or financial accounting, except to the extent required by GAAP or
Applicable Law as advised by Xxxxx'x regular independent tax advisors or
accountants;
(xi) renew or enter into any noncompete, exclusivity or
similar agreement that would restrict or limit, in any material respect, the
operations of Kroll and its subsidiaries, or, after the Effective Time, MMC or
its subsidiaries;
(xii) settle or compromise any material Actions or
investigations, whether now pending or hereafter made or brought, or waive,
release or assign any material rights or claims;
(xiii) (A) enter into any contract that would constitute a
Material Contract, or (B) modify, amend or terminate, or waive, release or
assign any material rights or claims with respect to, any Material Contract;
(xiv) renew, enter into, amend or waive any material right
under any contract with, or loan to, any affiliate of Kroll (other than its
direct or indirect wholly owned subsidiaries);
(xv) incur or commit to any capital expenditures in excess
of $2.5 million individually or $10.0 million in the aggregate;
(xvi) take any action intended to result in a material
breach of any representation or warranty of Kroll set forth in Article IV;
(xvii) make, revoke or amend any material Tax election,
enter into any closing agreement, settle or compromise any material claim or
assessment with respect to Taxes, agree to any adjustment of any Tax attribute,
file any claim for a refund of Taxes, execute or consent to any waivers
extending the statutory period of limitations with respect to the collection or
assessment of any Taxes or, without consulting prior thereto with MMC, file any
material Tax Returns (including any amended Tax Returns);
(xviii) permit or cause any of its subsidiaries to do any of
the foregoing or agree or commit to do any of the foregoing (it being understood
that for purposes of clauses (ii), (v), (vi) and (xv) of this Section 5.3(a),
the aggregate dollar thresholds referred to therein shall be aggregate
thresholds for conduct by Kroll and its subsidiaries taken as a whole); or
(xix) agree in writing or otherwise to take any of the
foregoing actions.
(b) ACQUISITION PROPOSALS.
(i) Kroll shall not, nor shall it permit any of its
subsidiaries to, nor shall it permit any director, officer or key employee of
Kroll or any of its subsidiaries, agents or representatives (including any
investment banker, attorney or accountant ("Representatives") retained by it or
any of its subsidiaries) to, directly or indirectly, (A) initiate, solicit or
encourage any inquiries with respect to, or the making of, an Acquisition
Proposal, (B) engage in any negotiations concerning, or provide any confidential
information or data to, or have any
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discussions with, any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, Governmental Authority or other entity
of any kind or nature (each, a "Person") relating to an Acquisition Proposal,
(C) approve or recommend or propose publicly to approve or recommend, any
Acquisition Proposal or (D) approve or recommend, or propose to approve or
recommend, or execute or enter into, any letter of intent, agreement in
principle, merger agreement, acquisition agreement, option agreement or other
similar agreement relating to any Acquisition Proposal or propose publicly or
agree to do any of the foregoing relating to any Acquisition Proposal.
(ii) Notwithstanding anything in this Agreement to the
contrary, nothing contained in this Agreement shall prevent Kroll or the Kroll
Board from complying with its disclosure obligations under Sections 14d-9 and
14e-2 of the Exchange Act with regard to an Acquisition Proposal; PROVIDED,
HOWEVER, that if such disclosure has the effect of withdrawing, modifying or
qualifying the approval of this Agreement by the Kroll Board or the Kroll Board
Recommendation in a manner adverse to MMC, MMC shall have the right to terminate
this Agreement to the extent set forth in Section 7.4(a) of this Agreement.
(iii) Notwithstanding anything in this Agreement to the
contrary, nothing contained in this Agreement shall prevent Kroll or any
officer, director, key employee or Representative of Kroll or any of its
subsidiaries acting on behalf of or at the direction of Kroll or any of its
subsidiaries, or the Kroll Board from at any time prior to, but not after, the
time this Agreement is adopted by the Kroll Stockholders at the Kroll
Stockholders Meeting, (A) providing information in response to a request
therefor by, or engaging in any negotiations or discussions with, a Person who
has made an unsolicited bona fide written Acquisition Proposal that is not made
in violation of Section 5.3(b)(i) if the Kroll Board receives from such Person
an executed confidentiality agreement on customary terms no less favorable to
Kroll than the Confidentiality Agreement, dated as of April 14, 2004, between
Kroll and MMC (the "Confidentiality Agreement"); or (B) recommending such an
unsolicited bona fide written Acquisition Proposal to the Kroll Stockholders, if
and only to the extent that, (1) in each such case referred to in clause (A) or
(B) above, the Kroll Board determines in good faith after consultation with
outside legal counsel that such action is necessary in order for its directors
to comply with their respective fiduciary duties under Applicable Law, (2) in
the case of clause (A) above, the Kroll Board determines in good faith after
consultation with outside legal counsel and outside financial advisors that it
is reasonably likely that such Acquisition Proposal would result in a Superior
Proposal; and (3) in the case of clause (B) above, the Kroll Board determines in
good faith that such Acquisition Proposal (in the form, other than immaterial
changes, that was the subject of the Superior Proposal Notice, as defined below)
constitutes a Superior Proposal and MMC shall have received written notice (the
"Superior Proposal Notice") of Xxxxx'x intention to take the action referred to
in clause (B) at least three business days prior to the taking of such action by
Kroll (the "Waiting Period"); PROVIDED, that the Kroll Board continues to
believe, after taking into account any modifications to the terms of the
transaction contemplated by this Agreement that are proposed by MMC after its
receipt of the Superior Proposal Notice (with respect to which modifications
Kroll and MMC shall endeavor to negotiate in good faith), that such Acquisition
Proposal constitutes a Superior Proposal. If the Kroll Board recommends an
unsolicited bona fide written Acquisition Proposal pursuant to clause (B) above,
MMC shall be entitled to terminate this Agreement pursuant to Section 7.4(a) of
the Agreement.
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(iv) Kroll agrees that it will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
Person (other than the parties hereto) conducted heretofore with respect to any
Acquisition Proposal. Kroll agrees that it will use reasonable best efforts to
promptly inform the officers, directors, key employees and Representatives of
Kroll and its subsidiaries of the obligations undertaken in this Section 5.3(b).
Kroll also agrees promptly, but in any event, within five days after the date of
this Agreement, to request the return or destruction of all information and
materials provided (to any Person other than the parties hereto) during the 18
months prior to the date of this Agreement by it, its subsidiaries or their
respective Representatives with respect to the consideration or making of any
Acquisition Proposal.
(v) From and after the execution of this Agreement, Kroll
shall promptly, orally notify MMC of any request for information or any
inquiries, proposals or offers relating to an Acquisition Proposal, indicating,
in connection with such notice, the name of such Person making such request,
inquiry, proposal or offer and the material terms and conditions of any
proposals or offers and Kroll shall provide to MMC written notice of any such
inquiry, proposal or offer within 24 hours of such event. Kroll shall keep MMC
informed orally on a reasonably current basis of the status of any Acquisition
Proposal, including with respect to the status and terms of any such proposal or
offer and whether any such proposal or offer has been withdrawn or rejected and
Kroll shall provide to MMC written notice of any such material developments
within 24 hours. Kroll also agrees to provide any information to MMC that it is
providing to another Person pursuant to this Section 5.3(b) at substantially the
same time it provides such information to such other Person, unless MMC has
already been provided such information.
(vi) Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in this Section 5.3(b) by any
officer, director or key employee of Kroll or any of its subsidiaries or any
Representative of Kroll or any of its subsidiaries, whether or not such Person
is purporting to act on behalf of Kroll or any of its subsidiaries or otherwise,
shall be deemed to be a breach of this Section 5.3(b) by Kroll.
(vii) Notwithstanding anything to the contrary contained
herein, this Agreement shall be submitted to the Kroll Stockholders for the
purpose of approving this Agreement and the Merger, regardless of the
recommendation or any change in the recommendation of the Kroll Board with
respect thereto.
(viii) For purposes of this Agreement:
(A) "Acquisition Proposal" means any proposal or offer with respect
to (1) a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, dissolution, liquidation or similar
transaction involving Kroll, (2) any purchase of an equity interest
(including by means of a tender or exchange offer) representing an amount
equal to or greater than a 15% voting or economic interest in Kroll, or (3)
any purchase of assets, securities or ownership interests representing an
amount equal to or greater than 15% of the consolidated assets of Kroll and
its subsidiaries taken as a whole (including stock of the subsidiaries of
Kroll).
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(B) "Superior Proposal" means a bona fide written Acquisition
Proposal (except that references in the definition of "Acquisition
Proposal" to "15%" shall be replaced by "50%") made by a Person other than
a party hereto that is on terms that the Kroll Board (after consultation
with its outside financial advisor and outside counsel) in good faith
concludes, taking into account all legal, financial, regulatory and other
aspects of the proposal (including the timing of consummation) and the
likelihood of obtaining financing and satisfying other conditions would, if
consummated, result in a transaction more favorable to the Kroll
Stockholders from a financial point of view than the transaction
contemplated by this Agreement.
(c) THIRD PARTY STANDSTILL AGREEMENTS. Subject to Section
5.3(b)(iii)(A), during the period from the date of this Agreement until the
earlier of the Effective Time and termination of this Agreement: (i) Kroll shall
not terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its subsidiaries is a party (other
than any involving MMC or its subsidiaries); and (ii) Kroll shall enforce, to
the fullest extent permitted under Applicable Law, the provisions of any such
confidentiality or standstill agreements, including, if so requested by MMC and
at MMC's expense, seeking injunctions to prevent any breaches of such agreements
and seeking to enforce specifically the terms and provisions thereof in any
court of the United States or any state thereof having jurisdiction.
(d) ACCESS. From the date hereof until the Effective Time and
subject to Applicable Law and the Confidentiality Agreement, Kroll shall (i)
give MMC, its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours and upon
reasonable notice to the offices, properties, books and records of Kroll and its
subsidiaries, (ii) furnish to MMC, its counsel, financial advisors, auditors and
other authorized representatives to the extent reasonably available such
financial and operating data and other information as such Persons may
reasonably request (including, to the extent reasonably practicable, furnishing
to MMC Xxxxx'x financial results in advance of filing any Kroll SEC Documents
containing such financial results), and (iii) instruct the employees, counsel,
financial advisors, auditors and other authorized representatives of Kroll and
its subsidiaries to cooperate in all reasonable respects with MMC in its
investigation of Kroll and its subsidiaries. Any investigation pursuant to this
Section 5.3(d) shall be conducted in such manner as not to interfere
unreasonably with the conduct of the business of Kroll and its subsidiaries. No
information or knowledge obtained by MMC in any investigation pursuant to this
Section shall affect or be deemed to modify any representation or warranty made
by Kroll hereunder. Notwithstanding anything to the contrary in this Agreement,
Kroll shall not be required to provide any information or access that it
reasonably believes would violate Applicable Law, rules or regulations or the
terms of any confidentiality obligation by which it is bound, or cause
forfeiture of attorney/client privilege.
(e) TERMINATION OF KROLL CREDIT AGREEMENT. Prior to the Effective
Time, Kroll (i) shall repay in full any amounts outstanding under the $25
million Credit Agreement, dated as of March 6, 2003, between Kroll as borrower
and Fleet National Bank as lender (the "Kroll Credit Agreement"), and (ii) shall
have received evidence reasonably satisfactory to MMC (including UCC termination
statements, release letters and other appropriate documentation from Fleet
National Bank) of the release or termination of (A) all liens, pledges, security
interests,
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claims or other encumbrances on any assets of Kroll or its subsidiaries, (B) all
pledges on the stock of any subsidiaries of Kroll, and (C) all guarantees by
Kroll or any of its subsidiaries, in each case arising under or pursuant to the
Kroll Credit Agreement and any related documents.
(f) SUPPLEMENTAL INDENTURE. Promptly following the Effective Time,
MMC shall, or shall cause the Surviving Corporation to, execute, in accordance
with Section 9.14 of the Indenture, dated as of January 2, 2004, between Kroll
as issuer and The Bank of New York as trustee (the "Indenture"), a supplemental
indenture thereto, and mail notice of the execution of such supplemental
indenture to holders of notes thereunder in accordance with the terms of the
Indenture.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
Kroll, MMC and Merger Sub to consummate the Merger shall be subject to the
satisfaction or waiver of the following conditions prior to the Closing:
(a) This Agreement shall have been approved and adopted by the
Kroll Stockholders in accordance with Applicable Law, the Kroll Certificate and
the Kroll Bylaws.
(b) The requisite waiting period, if any, under the HSR Act shall
have expired or terminated.
(c) All other requisite approvals and consents under applicable
Foreign Antitrust Laws shall have been obtained.
(d) No provision of any Applicable Law and no judgment, temporary
restraining order, preliminary or permanent injunction, order, decree or other
legal restraint or prohibition shall prohibit the consummation of the Merger.
6.2. CONDITIONS TO OBLIGATIONS OF MMC AND MERGER SUB. The obligation
of MMC and Merger Sub to consummate the Merger shall also be subject to the
satisfaction or waiver by MMC at or prior to the Closing of the following
conditions:
(a) The representations and warranties set forth in Article IV
(other than in the case of the representations and warranties contained in
Section 4.4(a), Section 4.4(b) and Section 4.12(a)), disregarding all
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect, shall be true and correct on the date hereof and at and
as of the Closing Date as if made on and as of such dates (except for
representations and warranties that are made as of a specified date, which shall
be true and correct only as of such specified date), with only such exceptions
as would not, individually or in the aggregate, have or reasonably be expected
to have a Material Adverse Effect.
(b) The representations and warranties set forth in Section 4.4(a)
and Section 4.4(b) shall be true and correct in all material respects on the
date hereof and on the Closing Date
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as if made on and as of such dates (except for representations and warranties
that are made as of a specified date, which shall be true and correct only as of
such specified date).
(c) The representation set forth in Section 4.12(a) shall be true
and correct in all respects on the date hereof and on the Closing Date as if
made on and as of such dates.
(d) Kroll shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing, except to the
extent that such covenants are qualified by terms such as "material" or
"Material Adverse Effect," in which case Kroll shall have performed and complied
with all of such covenants in all respects through the Closing.
(e) Kroll shall have delivered to MMC a certificate duly executed
by an authorized officer on behalf of Kroll to the effect that each of the
conditions specified above in Sections 6.2(a) through (d) is satisfied in all
respects.
6.3. CONDITIONS TO OBLIGATION OF KROLL. The obligation of Kroll to
consummate the Merger shall also be subject to the satisfaction or waiver by
Kroll at or prior to the Effective Time of the following conditions:
(a) The representations and warranties set forth in Article III,
disregarding all qualifications and exceptions contained therein relating to
materiality or Material Adverse Effect, shall be true and correct on the date
hereof and at and as of the Closing Date as if made on and as of such dates
(except for representations and warranties that are made as of a specified date,
which shall be true and correct only as of such specified date), with only such
exceptions as would not, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect.
(b) MMC and Merger Sub shall have performed and complied with all
of their respective covenants hereunder in all material respects through the
Closing, except to the extent that such covenants are qualified by terms such as
"material" or "Material Adverse Effect," in which case MMC and Merger Sub shall
have performed and complied with all of such covenants in all respects through
the Closing.
(c) MMC shall have delivered to Kroll a certificate executed by an
authorized officer on behalf of MMC to the effect that each of the conditions
specified above in Sections 6.3(a) through (b) is satisfied in all respects.
ARTICLE VII
TERMINATION; FEES AND EXPENSES
7.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the adoption and approval of this Agreement by the Kroll
Stockholders referred to in Section 6.1(a), by mutual written consent of Kroll
and MMC by action of their respective Boards.
7.2. TERMINATION BY EITHER MMC OR KROLL. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board
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of either MMC or Kroll if (a) the Merger shall not have been consummated by
November 30, 2004 (the "Termination Date"), whether such date is before or after
the date of the adoption of this Agreement by the Kroll Stockholders; PROVIDED,
HOWEVER, that the right to terminate this Agreement pursuant to this Section
7.2(a) shall not be available to any party whose breach of any provision of this
Agreement results in the failure of the Merger to be consummated by the
Termination Date, (b) the adoption by the Kroll Stockholders required by Section
6.1(a) shall not have been obtained at the Kroll Stockholders Meeting (after
giving effect to all adjournments or postponements thereof), or (c) any
Governmental Authority of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the consummation of the Merger and such order, decree or
ruling or other action shall have become final and nonappealable.
7.3. TERMINATION BY KROLL. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the adoption and approval of this Agreement by the Kroll Stockholders
referred to in Section 6.1(a), by action of the Kroll Board (a) if there has
been a breach of any representations, warranties, covenants or agreements made
by MMC or Merger Sub in this Agreement, or any such representations and
warranties shall have become untrue or incorrect after the execution of this
Agreement, such that the conditions set forth in Section 6.3(a) or 6.3(b) would
not be satisfied and such breach or failure to be true and correct is not cured
within 30 calendar days following receipt of written notice from Kroll of such
breach or failure (or such longer period during which MMC or Merger Sub
exercises reasonable best efforts to cure), or (b) in order to enter into an
agreement with respect to a Superior Proposal if Kroll has taken the action
referred to in Section 5.3(b)(iii)(B) and has otherwise complied with its
obligations under Section 5.3(b) of the Agreement as they pertain to the
Acquisition Proposal that is the subject of the Superior Proposal Notice;
PROVIDED, HOWEVER, that prior to any termination pursuant to this Section
7.3(b), (i) the Waiting Period shall have elapsed, and (ii) Kroll shall have
paid the Termination Fee and Expenses in accordance with Section 7.6.
7.4. TERMINATION BY MMC. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the adoption and approval of this Agreement by the Kroll Stockholders
referred to in Section 6.1(a), by action of the MMC Board (a) if the Kroll Board
shall have withdrawn, qualified or modified its approval of this Agreement or
the Kroll Board Recommendation in a manner adverse to MMC, or approved or
recommended any Acquisition Proposal (other than this Agreement and the Merger)
or shall have resolved to do any of the foregoing, or (b) if there has been a
breach of any representation, warranty, covenant or agreement made by Kroll in
this Agreement, or any such representation and warranty shall have become untrue
or incorrect after the execution of this Agreement, such that the conditions set
forth in Section 6.2(a), 6.2(b), 6.2(c) or 6.2(d) would not be satisfied and
such breach or failure to be true and correct is not cured within 30 calendar
days following receipt of written notice from MMC of such breach or failure (or
such longer period during which Kroll exercises reasonable best efforts to
cure).
7.5. EFFECT OF TERMINATION AND ABANDONMENT. (a) In the event of a
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VII, this Agreement shall become void and of no effect with no liability
on the part of any party hereto (or of any of its directors, officers,
employees, agents, legal and financial advisors or other Representatives),
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other than the provisions of this Section 7.5 and Section 7.6; PROVIDED,
HOWEVER, that, except as otherwise provided herein, no such termination shall
relieve any party hereto of any liability or damages resulting from any willful
or intentional breach of this Agreement.
7.6. FEES AND EXPENSES.
(a) In the event that:
(i) (A)(1) MMC shall have terminated this Agreement
pursuant to Section 7.4(b) by reason of Xxxxx'x intentional or reckless breach
of any representation, warranty, covenant or agreement or (2) MMC or Kroll shall
have terminated this Agreement pursuant to Section 7.2(b), (B) at or prior to
the time of such breach in the case of clause (A)(1) or at or prior to the Kroll
Stockholders Meeting in the case of clause (A)(2), any Person (other than MMC,
Merger Sub or their respective affiliates) shall have made (or publicly
disclosed its intention to make) and not withdrawn an Acquisition Proposal
(substituting 50% for the 15% threshold set forth in the definition of
Acquisition Proposal, a "Covered Proposal"), and (C) within nine (9) months of
termination of this Agreement, Kroll enters into an agreement with respect to a
Covered Proposal; or
(ii) MMC shall have terminated this Agreement pursuant to
Section 7.4(a); or
(iii) Kroll shall have terminated this Agreement pursuant to
Section 7.3(b),
then, in any such event, Kroll shall pay to MMC a termination fee in cash of $60
million (the "Termination Fee"). Any Termination Fee that becomes payable shall
be paid (x) in the case of clause (i) above, not later than the date on which
Kroll enters into an agreement with respect to a Covered Proposal, (y) in the
case of clause (ii) above, on the second business day after the date that the
Agreement is terminated, and (z) in the case of clause (iii) above, immediately
prior to the termination of the Agreement, in each case payable by wire transfer
of same day funds.
(b) Upon the termination of this Agreement:
(i) by MMC pursuant to Section 7.4(a);
(ii) by MMC pursuant to Section 7.4(b), PROVIDED that if the
termination pursuant to Section 7.4(b) is by reason of a breach of a
representation or warranty, such breach of the representation or warranty by
Kroll shall have been made on the date of this Agreement and such breach shall
have been actually known at that time to a senior executive of Kroll and
PROVIDED, FURTHER that at the time that MMC terminates this Agreement pursuant
to Section 7.4(b) Kroll shall not have been entitled to terminate this Agreement
pursuant to Section 7.3(a);
(iii) by Kroll pursuant to Section 7.2(a) if on or prior to
the time of such termination pursuant to Section 7.2(a) any Person (other than
MMC, Merger Sub or their respective affiliates) shall have made (or publicly
disclosed its intention to make) and not withdrawn an Acquisition Proposal;
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(iv) by MMC or Kroll pursuant to Section 7.2(b); or
(v) by Kroll pursuant to Section 7.3(b),
then, in any such event, Kroll shall pay to MMC and Merger Sub all of the
expenses actually incurred by MMC or Merger Sub in connection with this
Agreement and the proposed Merger up to a maximum amount of $5.0 million (the
"Expenses"). Any Expenses that become payable shall be paid (x) in the case of
clauses (i) through (iv) above on the date of termination of the Agreement, and
(y) in the case of clause (v) above, immediately prior to the termination of the
Agreement, in each case payable by wire transfer of same day funds.
(c) Kroll acknowledges that the agreements contained in this
Section 7.6 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, MMC would not enter into this
Agreement; accordingly, if Kroll fails to promptly pay any amount due pursuant
to this Section 7.6, and, in order to obtain such payment, MMC commences a suit
that results in a judgment against Kroll for the fees set forth in this Section
7.6 or any portion of such fees, Kroll shall pay to MMC its costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on the amount of the fees at the prime rate of Citibank, N.A. in effect on the
date such payment was required to be made from the date such payment was
required to be made through the date of payment.
(d) Except as specifically provided in this Section 7.6, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party hereto incurring such
expenses, except filing fees incurred in connection with Commission filings
relating to the Merger and the transactions contemplated by this Agreement and
printing and mailing costs related thereto, all of which shall be shared equally
by MMC and Kroll.
ARTICLE VIII
MISCELLANEOUS
8.1. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements in this Agreement shall
not survive the consummation of the Merger or the termination of this Agreement.
Notwithstanding the foregoing, the agreements and covenants which by their
nature are to be performed following the Effective Time, shall survive
consummation of the Merger.
8.2. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or delivered by a nationally recognized
overnight courier service to the parties hereto at the following addresses (or
at such other address for a party hereto as shall be specified by like notice):
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(a) if to MMC or Merger Sub:
Xxxxx & XxXxxxxx Companies, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
with a copy to
Xxxxxx X. Xxxxxxxxxx, Esq.
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
(b) if to Kroll:
Xxxxx Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
with a copy to
Xxxxxx X. Xxxxxx, Esq.
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
with a copy to
Xxxxx Xxxxxxxx, Esq.
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
8.3. INTERPRETATION. When a reference is made in this Agreement to
an Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The headings, the table of contents and
the index of defined terms contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes," or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." For the purposes of this Agreement, "Material Adverse
Effect" with respect to any party hereto means any event, change, circumstance,
effect or state of facts that (a) is a material adverse
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effect on the business, results of operations or financial condition of such
party hereto and its subsidiaries taken as a whole, other than any event,
change, circumstance, effect or state of facts that results from or arises out
of (i) any outbreak of hostilities, terrorism or war or (ii) changes in general
economic, regulatory or political conditions or conditions in the United States
or worldwide capital markets; or (b) has a material adverse effect on its
ability to consummate the transactions contemplated by this Agreement. For
purposes of this Agreement, a "subsidiary," when used with respect to any party
hereto, means any entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are directly or indirectly owned by such
party. Information disclosed in one section of the Kroll Disclosure Schedule
shall be integrated into another section of the Kroll Disclosure Schedule
without the necessity of a cross-reference to the extent its applicability
thereto is readily apparent.
8.4. COUNTERPARTS. This Agreement may be executed in counterparts,
which together shall constitute one and the same agreement. The parties hereto
may execute more than one copy of this Agreement, each of which shall constitute
an original.
8.5. ENTIRE AGREEMENT. This Agreement (including the documents and
the instruments referred to in this Agreement) and the Confidentiality Agreement
constitute the entire agreement among the parties hereto and thereto and
supersede all prior agreements and understandings, agreements or representations
by or among the parties hereto and thereto, written and oral, with respect to
the subject matter hereof and thereof.
8.6. THIRD-PARTY BENEFICIARIES. Except for the agreement set forth
in Sections 2.2 and 5.2(a), nothing in this Agreement, express or implied, is
intended or shall be construed to create any third-party beneficiaries.
8.7. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to the
conflicts of law rules of such state. All Actions arising out of or relating to
this Agreement, and the Confidentiality Agreement shall be heard and determined
in any state or federal court sitting in the State of Delaware.
8.8. CONSENT TO JURISDICTION; VENUE.
(a) Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the state courts of Delaware and to the jurisdiction of the
United States District Court for the District of Delaware for the purpose of any
Action arising out of or relating to this Agreement and the Confidentiality
Agreement, and each of the parties hereto irrevocably agrees that all claims in
respect to such Action may be heard and determined exclusively in any Delaware
state or federal court sitting in the State of Delaware. Each of the parties
hereto agrees that a final judgment in any Action shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Each of the parties hereto irrevocably consents to the service
of any summons and complaint and any other process in any other Action relating
to the Merger, on behalf of itself or its property, by the personal delivery of
copies of such process to such party.
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Nothing in this Section 8.8 shall affect the right of any party hereto to serve
legal process in any other manner permitted by law.
8.9. SPECIFIC PERFORMANCE. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties hereto acknowledges and
agrees that, in addition to all other remedies to which it may be entitled, each
of the parties hereto is entitled to a decree of specific performance, PROVIDED
that such party hereto was not in material default hereunder at the time of the
other party's material breach of the Agreement. The parties hereto agree that if
MMC, Merger Sub or Kroll shall have failed to perform its obligations under this
Agreement, then the party hereto seeking to enforce this Agreement against such
nonperforming party under this Agreement shall be entitled to specific
performance and injunctive and other equitable relief, and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that any party
hereto may have against another party hereto for any failure to perform its
obligations under this Agreement.
8.10. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties hereto. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties hereto and their respective successors and assigns.
8.11. AMENDMENT. This Agreement may be amended by the parties hereto
at any time before or after approval of the Merger by the Kroll Stockholders;
PROVIDED, HOWEVER, that after any such approval, no amendment shall be made that
by law requires further approval by the Kroll Stockholders without such approval
having been obtained. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
8.12. EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) subject to the proviso of Section 8.11, waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights and the single or partial
exercise of any rights hereof shall not preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
8.13. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
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IN WITNESS WHEREOF, MMC, Merger Sub and Kroll have signed this
Agreement as of the date first written above.
XXXXX & McLENNAN COMPANIES, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President &
General Counsel
KING MERGER CORP.
By: /s/ Xxx X. Xxxxxx
----------------------------------
Name: Xxx X. Xxxxxx
Title: President
XXXXX INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President & Chief Executive
Officer
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