<PAGE>
As filed with the Securities and Exchange Commission on November 25, 1997
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
MARSH & McLENNAN COMPANIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
__________
6411
(Primary Standard Industrial
Classification Code Number)
36-2668272
(I.R.S. Employer Identification No.)
1166 Avenue of the Americas
New York, New York 10036-2774
(212) 345-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Gregory F. Van Gundy
General Counsel and Secretary
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036-2774
(212) 345-5000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agents for Service)
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
/ /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. /x/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
The registrant hereby amends this registration on such date or dates as may
be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
(Cover continued on next page)
<PAGE>
(Continued form previous page)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION> Proposed Proposed
Maximum Maximum Amount of
Title of Each Class of Securities Amount to be Aggregate Price Aggregate Registration
to be Registered Registered Per Unit(1)(3) Offering Price(1) Fee
<S> <C> <C> <C> <C>
Common Stock, $1.00 par value, of
Marsh & McLennan Companies, Inc.,
including the Preferred Stock
Purchase Rights attached thereto (2) 69,229 shares $71.78125 $4,969,344 $1,506
</TABLE>
(1)Estimated for the sole purpose of computing the registration fee.
(2)The Preferred Stock Purchase Rights initially are attached to and trade with
all the shares of Common Stock outstanding as of, and issued subsequent to,
September 29, 1997, pursuant to the terms of the Company's Rights Agreement,
dated as of September 18, 1997. Until the occurrence of certain prescribed
events, the Preferred Stock Purchase Rights are not exercisable, are evidenced
by the certificates for the Common Stock and will be transferred only with the
Common Stock. The value attributable to such Preferred Stock Purchase Rights,
if any, is reflected in the market price of the Common Stock.
(3)Calculated pursuant to Rule 457(c) based on the average of the high and low
prices on the New York Stock Exchange on November 18, 1997.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to or qualification under the securities laws of any such State.
Prospectus
Subject To Completion, Dated November 25, 1997
MARSH & McLENNAN COMPANIES, INC.
69,229 Shares of Common Stock
This Prospectus relates to the offering from time to time of up to 69,229 shares
of Common Stock, par value $1.00 per share ("Common Stock"), of Marsh & McLennan
Companies, Inc., a Delaware corporation (the "Company"), by a certain
stockholder of the Company or its assignees (collectively, the "Selling
Stockholders"). The Common Stock offered hereby was issued as partial
consideration to the Selling Stockholders in connection with the acquisition by
Mercer Management Consulting, Inc. ("Mercer"), a Delaware corporation and an
indirect wholly-owned subsidiary of the Company, of certain assets of Corporate
Decisions, Inc., a corporation organized under the laws of the Commonwealth of
Massachusetts ("CDI"). See "Selling Stockholders." The Company will not receive
any proceeds from the sale of the Common Stock offered hereby.
The Selling Stockholders directly, or through agents, dealers or underwriters
designated from time to time, may sell the Common Stock offered hereby from time
to time on terms to be determined at the time of sale. To the extent required,
the number of shares of Common Stock to be sold, purchase price, public offering
price, the name of the Selling Stockholders, the names of any such agent, dealer
or underwriter, and any applicable commission or discount with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement.
The aggregate proceeds to the Selling Stockholders from the sale of the Common
Stock offered hereby will be the purchase price thereof less the aggregate
agents' commissions and underwriters' discounts, if any, and other expenses of
distribution not borne by the Company. The Company has agreed to pay certain
expenses of the offering contemplated hereby. See "Plan of Distribution."
The Selling Stockholders and any dealers, agents or underwriters that
participate with any Selling Stockholder in the distribution of Common Stock may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and any commission received by them and any
profit from the resale of Common Stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" for a description of information regarding indemnification
arrangements.
The Common Stock is listed on the New York Stock Exchange ("NYSE"), the Chicago
Stock Exchange, the Pacific Stock Exchange and the London Stock Exchange under
the trading symbol "MMC".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is November __, 1997
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, any accompanying
Prospectus Supplement or the documents incorporated or deemed incorporated by
reference herein, and any information or representations not contained herein or
therein may not be relied upon as having been authorized by the Company or by
any agent, dealer or underwriter. This Prospectus and any accompanying
Prospectus Supplement does not constitute an offer to sell or a solicitation of
an offer to buy the Common Stock in any circumstances in which such offer or
solicitation is unlawful. The delivery of this Prospectus or any Prospectus
Supplement at any time does not imply that the information herein is correct as
of any time subsequent to the date of such information.
No action has been or will be taken in any jurisdiction by the Company or any
Selling Stockholder that would permit a public offering of the Common Stock or
possession or distribution of this Prospectus or any accompanying Prospectus
Supplement in any jurisdiction where action for that purpose is required, other
than in the United States. Persons into whose possession this Prospectus or any
accompanying Prospectus Supplement comes are required by the Company and the
Selling Stockholders to inform themselves about and to observe any restrictions
as to the offering of the Common Stock and the distribution of this Prospectus
and any accompanying Prospectus Supplement.
Table of Contents
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
Available Information................ 3 Description of Capital Stock............... 4
Incorporation of Certain Documents Selling Stockholders....................... 7
by Reference....................... 3 Plan of Distribution....................... 8
The Company.......................... 4 Legal Matters.............................. 9
Use of Proceeds...................... 4 Experts.................................... 9
</TABLE>
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<PAGE>
AVAILABLE INFORMATION
This Prospectus constitutes part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Securities and Exchange Commission
(the "Commission") under the Securities Act with respect to the Common Stock
offered hereby. This Prospectus does not contain all information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Reference is made to the
Registration Statement and to the exhibits thereto for further information with
respect to the Company and the Common Stock offered hereby.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
information may also be accessed electronically by means of the Commission's
home page on the Internet (http://www.sec.gov). In addition, such reports, proxy
statements and other information concerning the Company can be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005, the Chicago Stock Exchange, 440 South LaSalle Street, Chicago,
Illinois 60605, and the Pacific Stock Exchange, 301 Pine Street, San Francisco,
California 94104.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1996 (including pages 23 through 49 of the Company's 1996 Annual
Report to Stockholders);
(2) The Company's Quarterly Reports on Form 10-Q dated May 14, 1997,
August 14, 1997 and November 14, 1997;
(3) The Company's Current Reports on Form 8-K, filed with the Commission
on March 14, 1997, April 7, 1997 and October 10, 1997;
(4) The Company's Registration Statement on Form 8-B, dated May 22, 1969,
as amended by an Amendment on Form 8 dated February 3, 1987,
describing the Common Stock, including any amendment or reports filed
for the purpose of updating such description; and
(5) The Company's Registration Statement on Form 8-A, dated October 10,
1997, describing the Preferred Stock Purchase Rights attached to the
Common Stock, including any further amendment or reports filed for the
purpose of updating such description.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the Common Stock offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be a part of this
Prospectus from the date of filing of such document. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
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<PAGE>
As used herein, the terms "Prospectus" and "herein" mean this Prospectus
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document. The Company will provide
without charge to any person to whom this Prospectus is delivered, on the
written or oral request of such person, a copy of any or all of the foregoing
documents incorporated by reference herein (other than exhibits not specifically
incorporated by reference into the texts of such documents). Requests for such
documents should be directed to: Corporate Development, Marsh & McLennan
Companies, Inc., 1166 Avenue of the Americas, New York, New York 10036.
Telephone requests may be directed to Corporate Development at (212) 345-5475.
THE COMPANY
Marsh & McLennan Companies, Inc., a professional services organization with
origins dating from 1871 in the United States, is a holding company which,
through its subsidiaries and affiliates, provides clients with analysis, advice
and transactional capabilities in the fields of insurance and reinsurance
broking, investment management and consulting.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
offered hereby, all of the net proceeds of which will be received by the Selling
Stockholders.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 406,000,000 shares of capital
stock, 400,000,000 of such shares being Common Stock, and 6,000,000 shares being
preferred stock, par value $1.00 per share ("Preferred Stock"). No shares of
Preferred Stock were issued or outstanding as of November 25, 1997.
Common Stock
Each holder of Common Stock is entitled to one vote for each share held on all
matters to be voted upon by the stockholders of the Company. The holders of
outstanding shares of Common Stock, subject to any preferences that may be
applicable to any outstanding series of Preferred Stock, are entitled to receive
ratably such dividends out of assets legally available therefor at such times
and in such amounts as the Board of Directors may from time to time determine.
Upon liquidation or dissolution of the Company, the holders of the Common Stock
will be entitled to share ratably in the assets of the Company legally available
for distribution to stockholders after payment of liabilities and subject to the
prior rights of any holders of any Preferred Stock then outstanding. Holders of
the Common Stock generally have no conversion, sinking fund, redemption,
preemptive or subscription rights. In addition, the Common Stock does not have
cumulative voting rights. Shares of the Common Stock are not subject to further
calls or assessments by the Company.
Preferred Stock
The Company is authorized to issue 6,000,000 shares of Preferred Stock, none of
which currently is issued or outstanding. The Board of Directors of the Company
has the authority, without further action by the stockholders, to issue shares
of Preferred Stock in one or more series and to fix the number of shares,
dividend rights, conversion rights, voting rights, redemption rights,
liquidation preferences, sinking funds, and any other rights, preferences,
privileges and restrictions applicable to each such series of Preferred Stock.
The holders of Preferred Stock will have the right to vote
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<PAGE>
separately as a class on any proposal involving fundamental changes in the
rights of holders of such Preferred Stock pursuant to the Delaware General
Corporation Law (the "DGCL").
In connection with the Company's Stockholder Rights Plan (the "Rights Plan"),
the Board of Directors has authorized the issuance of up to 2,000,000 shares of
Series A Junior Participating Preferred Stock ("Series A Preferred Stock") upon
exercise of preferred stock purchase rights issued under the Rights Plan.
Reference is hereby made to the Company's Registration Statement on Form 8-A,
dated October 10, 1997, which is incorporated by reference herein, for a
description of the preferred stock purchase rights attached to the Common Stock
and for a copy of the form of the Certificate of Designation that sets forth the
rights and preferences of the Series A Preferred Stock.
Certain Provisions of the Company's Restated Certificate of Incorporation and
By-laws and the Delaware General Corporation Law
Classified Board of Directors. The Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") provides for a Board of
Directors divided into three classes, each class to consist as nearly as
possible of one-third of the directors. Each director serves for a term of three
years and until his or her successor is elected and qualified. Pursuant to the
Certificate of Incorporation, the number of directors of the Company will be
fixed from time to time by the Board of Directors.
Removal of Directors by Stockholders. The DGCL provides that members of a
classified board of directors may only be removed for cause by the affirmative
vote of the holders of a majority of the outstanding shares of capital stock of
the Company entitled to vote on the election of such directors.
Stockholder Nomination of Directors. The Company's Restated By-laws (the
"By-laws") provide that written notice must be given of any stockholder
nomination of a director not less than sixty nor more than ninety days prior to
the date of the meeting at which directors are to be elected; provided, that if
the date for such meeting is not the date set forth in the By-laws and less than
seventy five days notice or prior public disclosure of the date for such meeting
is given to stockholders, then notice by a stockholder shall be timely if
received by the Company no later than fifteen days following the date such
public disclosure was made.
No Action by Written Consent. The Certificate of Incorporation provides that
stockholders of the Company may not act by written consent and may only act at
duly called meetings of such stockholders.
Interested Stockholder Provision. Article EIGHTH of the Certificate of
Incorporation provides for higher stockholder voting requirements for certain
transactions (such as business combinations) with or otherwise involving an
Interested Stockholder (as defined below). Such a transaction requires the
approval of the holders of a majority of the Company's outstanding voting power,
voting together as a single class (but excluding any voting stock owned by an
Interested Stockholder), unless such transaction is approved by a majority of
Disinterested Directors (as defined below), in which case the voting
requirements of the DGCL, the Certificate of Incorporation and the Company's
By-laws otherwise applicable govern. Article EIGHTH does not alter the
additional requirements regarding class votes available to holders of Preferred
Stock, if any, which arise under the DGCL and the Certificate of Incorporation.
Transactions covered by Article EIGHTH include mergers of the Company or any of
its subsidiaries with an Interested Stockholder, sales of all or any substantial
part of the assets of the Company and its subsidiaries to an Interested
Stockholder, the issuance or delivery of any securities of the Company or any of
its subsidiaries to an Interested Stockholder, any loan, advance or guarantee,
pledge or other financial assistance provided by the Company or any of its
subsidiaries to the Interested Stockholder, any voluntary dissolution or
liquidation of the Company or amendment to the Company's By-laws, a
reclassification of securities or recapitalization of the Company or other
transaction (if such reclassification, recapitalization or other transaction
results in the Interested Stockholder increasing its proportionate share of any
class of the Company's capital stock) or any agreement, contract, or other
arrangement to do any of the foregoing.
5
<PAGE>
An "Interested Stockholder" is defined in Article EIGHTH as any other
corporation, person, or entity which (i) beneficially owns or controls, directly
or indirectly, 10% or more of the voting stock of the Company (or has announced
a plan or intention to acquire such securities), and any affiliate or associate
of such corporation, person, or entity or (ii) is an affiliate or associate of
the Company and at any time within two-years prior to the date in question was
the beneficial owner of 10% or more of the voting stock of the Company.
Specifically excluded from the definition of Interested Stockholder are (i) the
Company and any of its subsidiaries, and (ii) any profit-sharing, employee stock
ownership or other employee benefit plan of the Company or any subsidiary, or
trustees or fiduciaries for such.
A "Disinterested Director" is defined in Article EIGHTH as a director who is not
an affiliate, associate, representative, agent or employee of an Interested
Stockholder, and who was a member of the Board of Directors prior to the time
that the Interested Stockholder involved in the transaction being considered
became an Interested Stockholder, and any successor to a Disinterested Director,
while such successor is a member of the Board of Directors, who is not an
affiliate, associate, representative, agent or employee of an Interested
Stockholder and who was nominated by a majority of the Disinterested Directors.
Article EIGHTH may not be altered, amended, or repealed without the affirmative
vote of the holders of a majority of the Company's outstanding voting power,
voting together as a single class (but excluding any voting stock owned by an
Interested Stockholder), except if recommended by a majority of Disinterested
Directors, in which case the voting requirements of the DGCL, the Certificate of
Incorporation and the Company's By-laws otherwise applicable govern.
Delaware Business Combination Statute. The Company is subject to Section 203 of
the DGCL ("Section 203"), which restricts certain transactions and business
combinations between a corporation and an "interested stockholder" (which is
generally defined by Section 203 to be a person owning 15% or more of the
corporation's outstanding voting stock) for a period of three years from the
date the stockholder becomes an interested stockholder. Subject to certain
exceptions, unless the transaction is approved by the Board of Directors and the
holders of at least two-thirds of the outstanding voting stock of the
corporation (excluding shares held by the interested stockholder), Section 203
prohibits significant business transactions such as a merger with, disposition
of significant assets to or receipt of disproportionate financial benefits by
the interested stockholder, or any other transaction that would increase the
interested stockholder's proportionate ownership of any class or series of the
Company's capital stock. The statutory ban does not apply if: (i) prior to the
time that any stockholder became an interested stockholder, the Board of
Directors approved either the business combination or the transaction in which
such stockholder became an interested stockholder, or (b) upon consummation of
the transaction in which any stockholder becomes an interested stockholder, the
interested stockholder owns at least 85% of the outstanding voting stock of the
corporation (excluding shares held by persons who are both directors and
officers or by certain employee stock plans).
Directors' Liability
The Certificate of Incorporation provides that a member of the Board of
Directors shall not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions by the director not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under section 174 of the DGCL (relating to the declaration of dividends and
purchase or redemption of shares in violation of the DGCL), or (iv) for
transactions from which the director derived an improper personal benefit.
The Certificate of Incorporation also provides for indemnification of directors
and officers to the fullest extent authorized by Delaware law.
Transfer Agent and Registrar
Harris Trust Company of New York acts as transfer agent and registrar for the
Common Stock.
6
<PAGE>
SELLING STOCKHOLDERS
General
On December __, 1997 Mercer, an indirect wholly-owned subsidiary of the Company,
acquired certain assets (the "Transaction") of CDI. In connection with the
Transaction, Mercer tendered and delivered to CDI approximately 138,458 shares
of Common Stock of the Company held by Mercer as partial payment for the sale by
CDI of certain of its assets upon the terms set forth in the Asset Purchase
Agreement dated as of November 17, 1997 among Mercer, CDI and the stockholders
of CDI. The Company entered into a Registration Rights Agreement, dated as of
December 1, 1997, with CDI (the "Registration Rights Agreement"), for CDI's
benefit and the benefit of CDI's stockholders who may from time to time hold
shares of Common Stock originally issued to CDI, wherein the Company agreed to
register with the Commission 69,229 shares of the Common Stock originally issued
in the Transaction (the "RRA Common Stock").
Selling Stockholders
The following table sets forth the name of the Selling Stockholders, the number
of shares of RRA Common Stock being offered hereby and the number of shares of
Common Stock beneficially owned by the Selling Stockholders. The Selling
Stockholders, other than CDI, are stockholders of CDI who may from time to time
receive distributions of the Common Stock from CDI which they then may offer
hereby. The number of shares of Common Stock beneficially owned and offered
hereby by the Selling Stockholders constitutes less than 1% of the issued and
outstanding Common Stock of the Company. Except as otherwise indicated, to the
knowledge of the Company, the Selling Stockholders have sole voting power and
sole investment power with respect to the shares they beneficially own. Assuming
that Selling Stockholders do not acquire shares of Common Stock after the date
hereof and the Selling Stockholders sell all shares of the RRA Common Stock
offered hereby, the Selling Stockholders will own an aggregate of 69,229 shares
of Common Stock.
Shares of Common Stock RRA Common Stock
Name of Selling Stockholders Owned Before the Offering Offered hereby
Corporate Decisions, Inc. 138,458 shares 69,229 shares
David Morrison. 0 0
Adrian Slywotzky 0 0
Kevin Mundt 0 0
William Stevenson 0 0
Theodore Moser 0 0
John Kania 0 0
Kirk Grosel 0 0
Charles Hoban 0 0
Richard Wise 0 0
The Registration Rights Agreement
Shelf Registration. The Company has agreed in the Registration Rights Agreement
to file the registration statement of which this Prospectus forms a part, to use
its commercially reasonable efforts to cause such registration statement to be
7
<PAGE>
declared effective under the Securities Act as soon as possible on or after the
closing date for the Transaction (the "Closing Date") and to keep it
continuously effective in order to permit this Prospectus to be usable at all
times during the period ending on the first anniversary of the Closing Date or
such shorter period that will terminate when the RRA Common Stock is publicly
sold (the "Effectiveness Period").
PLAN OF DISTRIBUTION
The Selling Stockholders may sell the Common Stock being offered hereby directly
to other purchasers, or to or through underwriters, dealers or agents. To the
extent required, a Prospectus Supplement with respect to the Common Stock will
set forth the terms of the offering of the Common Stock, including the name(s)
of any underwriters, dealers or agents, the name of the Selling Stockholders,
the number of shares of Common Stock to be sold, the price of the offered Common
Stock, any underwriting discounts or other items constituting underwriters'
compensation and any discounts or concessions allowed or reallowed or paid to
dealers.
The Common Stock offered hereby may be sold from time to time directly by the
Selling Stockholders or, alternatively, through underwriters, broker-dealers or
agents. Such Common Stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at varying prices
determined at the time of sale or at negotiated prices. Such sales may be
effected in transactions (which may involve crosses or block transactions) (i)
on any national securities exchange or quotation service on which the Common
Stock may be listed or quoted at the time of sale, (ii) in the over-the-counter
market, (iii) in transactions otherwise than on such exchanges or services or in
the over-the-counter market or (iv) through the writing of options. In
connection with sales of the Common Stock offered hereby or otherwise, the
Selling Stockholders may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of such Common Stock in the course of
hedging the positions they assume. The Selling Stockholders may also sell the
Common Stock offered hereby short and deliver such Common Stock to close out
such short positions, or loan or pledge such Common Stock to broker-dealers that
in turn may sell such securities. The Common Stock offered hereby also may be
sold pursuant to Rule 144 under the Securities Act.
The Selling Stockholders and any such underwriters, brokers, dealers or agents,
upon effecting the sale of the Common Stock, may be deemed "underwriters" as
that term is defined by the Securities Act.
The underwriter or underwriters with respect to a particular underwritten
offering of Common Stock will be named in the Prospectus Supplement relating to
such offering, and if an underwriting syndicate is used, the managing
underwriter or underwriters will be set forth on the cover of such Prospectus
Supplement. Unless otherwise set forth in the Prospectus Supplement, the
obligations of the underwriters to purchase the Common Stock will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all the Common Stock if any is purchased. Any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
If a dealer is utilized in the sale of any Common Stock in respect of which this
Prospectus is delivered, the Selling Stockholders may sell such Common Stock to
the dealer, as principal. The dealer may then resell such Common Stock to the
public at varying prices to be determined by such dealer at the time of resale.
To the extent required, the name of the dealer and the terms of the transaction
will be set forth in the Prospectus Supplement relating thereto.
In connection with the sale of the Common Stock offered hereby, underwriters or
agents may receive compensation from the Company, the Selling Stockholders or
from purchasers of such Common Stock for whom they may act as agents in the form
of discounts, concessions, or commissions. Underwriters, agents, and dealers
participating in the distribution of the Common Stock may be deemed to be
underwriters, and any such compensation received by them and any profit on the
resale of Common Stock by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
8
<PAGE>
The Common Stock is listed on the NYSE, the Pacific Stock Exchange, the Chicago
Stock Exchange and the London Stock Exchange. Any underwriters to whom Common
Stock is sold by the Selling Stockholders for public offering and sale may make
a market in such Common Stock, but such underwriters will not be obligated to do
so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for any Common
Stock.
The Selling Stockholders, agents, dealers, and underwriters may be entitled
under the Registration Rights Agreement or other agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments that the Selling Stockholders, agents, dealers, or underwriters may
be required to make with respect thereto. Underwriters, dealers, or agents and
their associates may be customers of, engage in transactions with and perform
services for, the Company in the ordinary course of business.
The Company has agreed to pay certain expenses in connection with the offering
contemplated hereby, including (i) registration and filing fees, (ii) fees and
expenses of providing certain information to the Selling Stockholders, (iii)
fees and expenses of compliance with securities or blue sky laws and (iv) fees
and expenses of preparing and delivering certificates representing the Common
Stock. The Selling Stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the Common
Stock against certain liabilities, including liabilities arising under the
Securities Act. The Company and the Selling Stockholders have agreed to
indemnify each other and certain other persons against certain liabilities in
connection with the offering of the Common Stock including liabilities arising
under the Securities Act.
LEGAL MATTERS
The validity of the Common Stock being offered hereby is being passed upon for
the Company by Gregory Van Gundy, Marsh & McLennan Companies, Inc., 1166 Avenue
of the Americas, New York, New York 10036-2774. Mr. Van Gundy, General Counsel
and Secretary of the Company, beneficially owns, or has rights to acquire under
the Company's employee benefit plans, an aggregate of less than 1% of the
Company's Common Stock.
EXPERTS
The consolidated financial statements and supplemental notes of the Company and
its subsidiaries as of December 31, 1996 and 1995 and for each of the years in
the three year period ended December 31, 1996, included and incorporated by
reference in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 and incorporated by reference into this Prospectus, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements of Johnson & Higgins and its subsidiaries
as of and for the year ended December 31, 1996, included in the Company's
Current Report on Form 8-K filed with the Commission on April 7, 1997, and
incorporated by reference into this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and incorporated herein in reliance upon the authority of said
firm as experts in accounting and auditing.
9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the expenses to be borne by the Company in
connection with the offering described in this Registration Statement. All such
expenses other than the Securities and Exchange Commission registration fee are
estimates.
Securities and Exchange Commission Registration Fee................. $ 1,505
Legal Fees and Expenses............................................. 10,000
Miscellaneous............................ .......................... 3,495
-------
Total........................................................... $15,000
Item 15. Indemnification of Directors and Officers
As authorized by Section 145 of the General Corporation Law of the State of
Delaware, each director and officer of the Company may be indemnified by the
Company against expenses (including attorney's fees, judgments, fines and
amounts paid in settlement) actually and reasonably incurred in connection with
the defense or settlement of any threatened, pending or completed legal
proceedings in which he is involved by reason of the fact that he is or was a
director or officer of the Company if he acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
Company and, with respect to any criminal action or proceeding, if he had no
reasonable cause to believe that his conduct was unlawful. If the legal
proceeding, however, is by or in the right of the Company, the director or
officer may not be indemnified in respect of any claim, issue or matter as to
which he shall have been adjudged to be liable for negligence or misconduct in
the performance of his duty to the Company unless a court determines otherwise.
In addition, the Company maintains directors' and officers' liability insurance
policies.
Article Sixth of the Restated Certificate of Incorporation of the Company and
Article VI of the Restated By-laws of the Company provide that, to the fullest
extent authorized by law, directors of the Company will not be liable for
monetary damages to the Company or its stockholders for breaches of their
fiduciary duties.
10
<PAGE>
Item 16. Exhibits
The following is a list of all exhibits filed as a part of this Registration
Statement on Form S-3, including those incorporated herein by reference.
Exhibit
Number Description of Exhibits
2 Asset Purchase Agreement by and among Mercer, CDI and the stockholders
of CDI identified in Exhibit A thereto, dated as of November 17, 1997.
4 Rights Agreement, dated as of September 18, 1997, (incorporated by
reference to the Company's Registration Statement on Form 8-A, dated
October 10, 1997).
5 Opinion of Gregory F. Van Gundy, Esq., with respect to the validity of
the securities being registered.
23(a) Consent of Deloitte & Touche LLP, Independent Auditors.
23(b) Consent of Arthur Andersen LLP, Independent Public Accountants.
23(c) Consent of Gregory F. Van Gundy, Esq. (included in his opinion filed
as Exhibit 5).
24(a) Powers of Attorney of certain directors of the Company (incorporated
by reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996).
24(b) Powers of Attorney of certain directors of the Company (Messrs. Olsen
and Barham) (incorporated by reference to the Company's Registration
Statement on Form S-3, Registration No. 333-282011).
24(c) Power of Attorney for The Rt. Hon. Lord Lang of Monkton.
Item 17. Undertakings
The undersigned registrant (the "Registrant") hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) To include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; (iii) To include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement; provided, however, that, since this registration
statement is on Form S-3, paragraphs (l)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement;
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bonafide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
11
<PAGE>
The Registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bonafide offering thereof. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant pursuant to the
provisions set forth in Item 15, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, in the State of New York, on
November 25, 1997.
MARSH & McLENNAN
COMPANIES, INC.
By: /s/ A.J. C. Smith
---------------------------
Name: A.J.C. Smith
Title: Chairman & Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ A.J.C. Smith Chairman & Chief Executive Officer
- ---------------------- (Principal Executive Officer) November 25, 1997
A.J.C. Smith
/s/ Frank J. Borelli Senior Vice President & Chief Financial Officer
- ----------------------
Frank J. Borelli (Principal Financial Officer) November 25, 1997
/s/ Douglas C. Davis Vice President and Controller
- ----------------------
Douglas C. Davis (Principal Accounting Officer) November 25, 1997
*
- ----------------------
Norman Barham Director November 25, 1997
*
- ----------------------
Lewis W. Bernard Director November 25, 1997
*
- ----------------------
Richard H. Blum Director November 25, 1997
*
- ----------------------
Peter Coster Director November 25, 1997
*
- ----------------------
Robert F. Erburu Director November 25, 1997
*
- ----------------------
Jeffrey W. Greenberg Director November 25, 1997
*
- ----------------------
Ray J. Groves Director November 25, 1997
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
*
- ----------------------
Richard S. Hickok Director November 25, 1997
*
- ----------------------
David D. Holbrook Director November 25, 1997
*
- ----------------------
Ian Lang Director November 25, 1997
*
- ----------------------
Lawrence J. Lasser Director November 25, 1997
*
- ----------------------
Richard M. Morrow Director November 25, 1997
*
- ----------------------
David A. Olsen Director November 25, 1997
*
- ----------------------
George Putnam Director November 25, 1997
*
- ----------------------
Adele Smith Simmons Director November 25, 1997
*
- ----------------------
John T. Sinnott Director November 25, 1997
*
- ----------------------
Frank J. Tasco Director November 25, 1997
</TABLE>
* By: /s/Gregory F. Van Gundy
----------------------
Gregory F. Van Gundy
Attorney-in-fact
14
<PAGE>
Exhibit
Number Description of Exhibits
2 Asset Purchase Agreement by and among Mercer, CDI and the stockholders
of CDI identified Exhibit A thereto, dated as of November 17, 1997
4 Rights Agreement, dated as of September 18, 1997, as amended
(incorporated by reference to the Company's Registration Statement on
Form 8-A, dated October 10, 1997).
5 Opinion of Gregory F. Van Gundy, Esq., with respect to the validity of
the securities being registered.
23(a) Consent of Deloitte & Touche LLP, Independent Auditors.
23(b) Consent of Arthur Andersen LLP, Independent Public Accountants.
23(c) Consent of Gregory F. Van Gundy, Esq. (included in his opinion filed
as Exhibit 5).
24(a) Powers of Attorney of certain directors of the Company (incorporated
by reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996).
24(b) Powers of Attorney of certain directors of the Company (Messrs. Olsen
and Barham)(incorporated by reference to the Company's Registration
Statement on Form S-3, Registration No. 333-282011).
24(c) Power of Attorney for The Rt. Hon. Lord Lang of Monkton.
15
<PAGE>
ASSET PURCHASE AGREEMENT
Dated November 17, 1997
among
MERCER MANAGEMENT CONSULTING, INC.,
CORPORATE DECISIONS, INC.,
and
THE SHAREHOLDERS OF CORPORATE DECISIONS, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
1.1 Definitions....................................................1
ARTICLE II THE TRANSACTION
2.1 Purchase and Sale of Assets....................................6
2.2 Excluded Assets................................................8
2.3 Exclusion of Liabilities and Obligations.......................8
2.4 Assumption of Certain Liabilities and Obligations.............10
2.5 Nonassignable Material Contracts..............................11
2.6 Instruments of Transfer andConveyance.........................11
2.7 Closing.......................................................11
ARTICLE III PAYMENT OF PURCHASE PRICE
3.1 Purchase Price................................................12
3.2 Form and Delivery.............................................12
3.3 Purchase Price Allocation.....................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CDI
AND THE SHAREHOLDERS
4.1 Representations and Warranties of CDI.........................14
4.1.1 Existence and Good Standing..............................14
4.1.2 FinancialStatements......................................15
4.1.3 No Undisclosed Liabilities...............................15
4.1.4 Books andRecords.........................................16
4.1.5 Warranties...............................................16
4.1.6 Material Contracts.......................................16
4.1.7 Litigation...............................................17
4.1.8 Returns; Taxes...........................................17
4.1.9 Intellectual Property....................................18
4.1.10 Compliance with Laws.....................................19
4.1.11 Insurance................................................19
4.1.12 Employees................................................19
4.1.13 Labor Relations..........................................20
4.1.14 Clients and Suppliers....................................20
4.1.15 Sufficiency of Assets....................................21
i
<PAGE>
4.1.16 Subsidiaries.............................................21
4.1.17 Environmental Laws and Regulations.......................21
4.1.18 Affiliate Transactions...................................22
4.1.19 Capital Expenditures.....................................22
4.1.20 Disclosure...............................................22
4.1.21 Broker's or Finder's Fees................................22
4.1.22 Ability to Conduct Business..............................22
4.1.23 HSR Status...............................................22
4.1.24 Consents and Approvals................................. 23
4.2 Representations and Warranties of CDI
and the Shareholders...............................................23
4.2.1 Authorization and Validity ofAgreements..................23
4.2.2 Consents and Approvals; NoViolations.....................24
4.2.3 Changes inAssets.........................................24
4.2.4 Title to Properties; CDIShares...........................25
4.2.5 Intellectual Property....................................25
4.2.6 Employees................................................26
4.2.7 Clients and Suppliers....................................26
4.2.8 Information in Registration Statement....................26
4.2.9 Acquisition for Investment...............................26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF MERCER
5.1 Existence and Good Standing of Mercer;
Power and Authority...........................................28
5.2 Consents and Approvals; No Violations.........................28
5.3 Litigation....................................................28
5.4 Broker's or Finder's Fees.....................................29
5.5 Existence and Good Standing of Marsh & McLennan ..............29
5.6 Corporate Authority of Marsh & McLennan ......................29
5.7 MMC Stock ....................................................29
5.8 Information ..................................................29
ARTICLE VI COVENANTS OF CDI AND THE SHAREHOLDERS
6.1 Cooperation...................................................30
6.2 Conduct of Business...........................................30
6.3 Review of the Assets..........................................31
6.4 Notice of Sale ...............................................31
6.5 Non-Competition; Non-Solicitation; Non-Interference...........32
6.6 Assignment of Name............................................33
6.7 Information for Registration Statement .......................33
6.8 Resale Restrictions ..........................................33
6.9 Dissolution of CDSNC .........................................33
ii
<PAGE>
ARTICLE VII COVENANTS OF MERCER
7.1 Cooperation...................................................34
7.2 MMC Stock ....................................................34
7.3 Registration Rights...........................................34
7.4 Insurance.....................................................34
ARTICLE VIII CONDITIONS TO MERCER'S OBLIGATIONS
8.1 Representations andWarranties.................................35
8.2 Injunction....................................................35
8.3 GovernmentalApprovals.........................................35
8.4 Consents;Permits..............................................35
8.5 Performance of Agreements.....................................35
8.6 TransferDocuments.............................................36
8.7 No Material AdverseChange.....................................36
8.8 Pledge and Escrow Agreement...................................36
8.9 Registration Rights Agreement.................................36
8.10 EmploymentAgreements..........................................36
8.11 CDI Organization and Good Standing............................36
8.12 Resolutions ofCDI.............................................36
8.13 Proceedings...................................................37
8.14 Employees.....................................................37
8.15 Opinion of Counsel for CDI and the Shareholders...............37
8.16 Name Assignment...............................................37
8.17 Sublease......................................................37
ARTICLE IX CONDITIONS TO CDI'S AND THE SHAREHOLDERS'
OBLIGATIONS
9.1 Representations andWarranties.................................37
9.2 Injunction....................................................38
9.3 GovernmentalApprovals.........................................38
9.4 Consents......................................................38
9.5 Performance ofAgreements......................................38
9.6 Pledge and Escrow Agreement...................................38
9.7 Registration Rights Agreement.................................38
9.8 EmploymentAgreements..........................................38
9.9 Resolutions of Mercer and Marsh &McLennan.....................38
9.10 Proceedings...................................................38
9.11 Opinion of Counsel for Marsh & McLennan.......................39
9.12 Sublease......................................................39
9.13 No Material Adverse Effect....................................39
iii
<PAGE>
ARTICLE X OTHER AGREEMENTS
10.1 Further Assurances............................................39
10.2 Books, Records and Information................................39
10.3 Mail..........................................................40
10.4 Payments......................................................40
10.5 Taxes.........................................................41
10.6 Employees.....................................................42
10.7 Employment Taxes and Reporting................................45
10.8 CDI's Offices.................................................45
ARTICLE XI TERMINATION PRIOR TO CLOSING
11.1 Termination...................................................45
11.2 Effect onObligations..........................................46
ARTICLE XII SURVIVAL AND INDEMNIFICATION
12.1 Survival of Representations, Warranties andCovenants..........46
12.2 Indemnification...............................................47
12.3 IndemnificationProcedure......................................48
12.4 Limitation of Liability.......................................51
12.5 Exclusive Remedy..............................................52
ARTICLE XIII MISCELLANEOUS
13.1 EntireAgreement...............................................52
13.2 Successors andAssigns.........................................53
13.3 Counterparts..................................................53
13.4 Headings......................................................53
13.5 Modification andWaiver........................................53
13.6 No Third Party BeneficiaryRights..............................53
13.7 Bulk TransferLaws.............................................53
13.8 Expenses......................................................54
13.9 Notices.......................................................54
13.10Governing Law.................................................55
13.11Publicity.....................................................55
13.12Severability..................................................55
iv
<PAGE>
EXHIBITS
EXHIBIT A List of Shareholders
EXHIBIT B Disclosure Schedule
EXHIBIT C Form of Bill of Sale
EXHIBIT D Form of Escrow Agreement
EXHIBIT E Purchase Price Forfeiture
EXHIBIT F Purchase Price Allocation
EXHIBIT G Form of Name Assignment
EXHIBIT H Form of Registration Rights Agreement
EXHIBIT I Form of Opinion of Counsel for CDI and the Shareholders
EXHIBIT J Form of Sublease
EXHIBIT K Form of Opinion of Counsel for Marsh & McLennan
EXHIBIT L Shareholder Indemnification Allocation
v
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated November 17, 1997, among Mercer Management
Consulting, Inc., a corporation organized under the laws of the State of
Delaware ("Mercer"), Corporate Decisions, Inc., a corporation organized under
the laws of the Commonwealth of Massachusetts ("CDI"), and the individuals
identified on Exhibit A attached hereto (each a "Shareholder," collectively, the
"Shareholders").
W I T N E S S E T H :
WHEREAS, Mercer desires to purchase from CDI, and CDI desires to sell to Mercer,
the Business (as defined herein), all upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, the Shareholders, as the owners of all of the issued and outstanding
capital stock of CDI, desire to cause such purchase and sale to be effected, all
upon the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants hereinafter set forth, the parties hereto agree as follows:
Article I
DEFINITIONS
1 Definitions. As used in this Agreement, the following terms shall have the
meanings set forth below (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"Affiliate": any Person directly or indirectly controlling or controlled
by, or under direct or indirect common control with, the Person specified.
"Agreement": this Asset Purchase Agreement, as amended from time to time.
"Ancillary Agreements": as defined in Section 4.2.1 hereof.
"Assets": as defined in Section 2.1 hereof.
1
<PAGE>
"Asset Transfer Documents": as defined in Section 2.6 hereof.
"Assumed Contracts": the "Material Contracts" that have been validly
assigned to Mercer at or following the Closing.
"Assumed Liabilities": as defined in Section 2.4 hereof.
"Average Price": as defined in Section 3.2 hereof.
"Books and Records": all books, records, files and data, certificates and
other documents related to the conduct of the Business or the ownership of
the Assets, all sales and promotional literature, or copies thereof, used
or held for use in connection with the conduct of the Business, and all
pending customer proposals (including backup documentation and work papers)
submitted in connection with the Business, but in no event including the
minute books or tax records of CDI.
"Business": the business currently conducted by CDI as a going concern.
"Business Day": any day excluding Saturday, Sunday and any day on which
banks in the City of New York are authorized or required by law or other
governmental action to close.
"Cash Purchase Price": as defined in Section 3.1 hereof.
"Cause": as defined in Section 3.2(b) hereof.
"CDI": as defined in the preamble to this Agreement.
"CDI Names": as defined in Section 6.6 hereof.
"CDI Shares": all of the issued and outstanding capital stock of CDI.
"CDSNC": Corporate Decisions, Inc., SNC, a societe en nom collectif
organized under the laws of France.
"Certificate": as defined in Section 12.3(a) hereof.
"Closing": as defined in Section 2.7 hereof.
"Closing Date": as defined in Section 2.7 hereof
"Code": the Internal Revenue Code of 1986, as amended, together with the
regulations from time to time promulgated thereunder.
2
<PAGE>
"Disability": total and permanent disability of an individual which
qualifies such individual to receive long-term disability benefits under
the Basic Long Term Disability Plan of Marsh & McLennan (or any successor
plan) that is available to employees of Mercer.
"Disclosure Schedule": the Disclosure Schedule delivered to Mercer by CDI,
concurrently with the execution of this Agreement, which is incorporated
herein by reference and made a part hereof.
"Dollars" or "$": U.S. dollars.
"Employee Benefits Plans": as defined in Section 4.1.12(b), and all trusts
related thereto.
"Employee Hire Date": as defined in Section 10.6(c) hereof.
"Employees": as defined in Section 4.1.12(a) hereof.
"Encumbrances": liens, security interests, options, rights of first
refusal, easements, mortgages, charges, debentures, indentures, deeds of
trust, rights-of-way, restrictions, agreements, encroachments, licenses,
leases, permits, security agreements, or any other encumbrances or other
restrictions or limitations on the use of real or personal property or
irregularities in title thereto.
"Environmental Laws": any federal, state, local or foreign statute, law,
rule, regulation, ordinance, code, permit, Order or rule of common law now
in effect and in each case as amended to date and any judicial or
administrative interpretation thereof relating to Hazardous Materials,
environmental matters, the protection of public health and safety from
environmental or health concerns or otherwise relating to environmental
conditions.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and rulings promulgated thereunder.
"Escrow Agreement": as defined in Section 3.2(b) hereof.
"Excluded Assets": as defined in Section 2.2 hereof.
"Excluded Liabilities": as defined in Section 2.3 hereof.
"Financial Statements": as defined in Section 4.1.2 (a) hereof.
3
<PAGE>
"GAAP": United States generally accepted accounting principles and
practices as in effect from time to time and applied consistently
throughout the periods involved.
"Hazardous Materials": all hazardous substances, wastes, materials or
constituents, solid wastes, special wastes, toxic substances, pollutants,
contaminants, petroleum or petroleum derived substances or wastes,
radioactive materials, urea formaldehyde, polychlorinated biphenyls, radon
gas and related materials, including, without limitation, any such
materials defined, listed, identified under or described in any applicable
Environmental Laws.
"HSR Act": the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Indemnified Party": as defined in Section 12.3(a) hereof.
"Indemnifying Party": as defined in Section 12.3(a) hereof.
"Intellectual Property": all technology, know-how and trade secrets
relating to or used in the Business, whether owned by CDI or licensed from
third parties, including computer programs and software, together with the
operating codes, source codes, updates, upgrades, modifications,
enhancements and any user and technical documentation or utilities with
respect thereto, and all patents, patent licenses and patent applications,
copyrights and copyright applications and other intellectual property
rights and the trademarks, trade names, service marks and logos (including
any registration and any application for registration of any of the
foregoing), relating to or used in the Business.
"Interim Statements": as defined in Section 4.1.2(b) hereof.
"Knowledge": the actual knowledge of: (i) in the case of CDI, any of the
following officers of CDI: David Morrison, Adrian Slywotzky and Kevin
Mundt; (ii) in the case of the Shareholders, any of the Shareholders; and
(iii) in the case of Mercer, any of the following officers of or advisors
to Mercer: James Quella, Thomas Waylett, David Mayhew, Joseph Rotberg,
Angela Fiorini, Robert Rapport and Dana Bolton; in each case (i), (ii) and
(iii) after having read and carefully considered the representation or
warranty to which such knowledge relates and, in case (ii), after due
inquiry of the other Shareholders.
"Lease": Lease dated May 24, 1991 between CDI and Fort Hill Square
Associates, as amended, for the lease of CDI's offices at One International
Place, Boston, Massachusetts.
4
<PAGE>
"Loss": as defined in Section 12.2(a) hereof.
"Material Adverse Effect": a material adverse effect on the Assets, Assumed
Liabilities, condition (financial or otherwise) or results of operations of
CDI or the Business.
"Marsh & McLennan": Marsh & McLennan Companies, Inc., a corporation
organized under the laws of the State of Delaware.
"Material Contracts": as defined in Section 4.1.6 hereof.
"Mercer": as defined in the preamble to this Agreement.
"MMC Report": as defined in Section 5.8 hereof.
"MMC Stock": shares of the common stock, $1.00 par value, of Marsh &
McLennan.
"Name Assignment": as defined in Section 6.6 hereof.
"Order": any order, judgment, injunction, award, decree or writ issued by a
court of law or governmental authority.
"Permits": as defined in Section 2.1(e) hereof.
"Person": any individual, partnership, joint venture, corporation, trust,
unincorporated organization, government or department or agency thereof or
other entity.
"Prepaid Assets": any prepaid expenses as of the Closing including
inventory, supplies, stationery and express courier delivery, in each case
relating to specific clients of the Business and to be billed to such
clients on a pass-through basis in connection with services to be performed
for such clients.
"Purchase Price": as defined in Section 3.1 hereof.
"Purchase Price Allocation": as defined in Section 3.3 hereof.
"Registration Rights Agreement": as defined in Section 7.3 hereof.
"Registration Statement": the Registration Statement on Form S-3 to be
filed by Marsh & McLennan with the SEC to register under the 1933 Act
5
<PAGE>
the MMC Stock payable to CDI on the Closing Date pursuant to this
Agreement.
"Returns": all returns, declarations, reports, statements and other
documents required to be filed in respect of Taxes.
"SEC": the Securities and Exchange Commission.
"1933 Act": the Securities Act of 1933, as amended.
"Shareholder": as defined in the preamble to this Agreement.
"Sublease": as defined in Section 8.17 hereof.
"Subsidiary": with respect to any Person, any company, association or other
business entity, a majority of the equity interests in or voting control of
which is owned or controlled by such Person.
"Tax": any federal, foreign, state, country, local and other tax
(including, without limitation, net income, gross income, gross receipts,
transfer, excise, property, franchise, profits, license, lease, sales, use,
data processing, ad valorem, goods and services, value added, withholding,
estimated, occupancy, capital, employment, unemployment compensation,
payroll related, social security, severance, stamp import duties and other
governmental charges and assessments), whether or not measured in whole or
in part by net income, and including deficiencies, interest, additions to
tax or interest, and penalties with respect thereto, and including expenses
associated with contesting any proposed adjustment related to any of the
foregoing.
"Transferring Employee": as defined in Section 10.6(c) hereof.
Article II
THE TRANSACTION
1 Purchase and Sale of Assets. Subject to the terms and conditions of this
Agreement, Mercer shall purchase from CDI, and CDI shall sell, convey, transfer,
assign and deliver, and cause to be sold, conveyed, assigned and delivered to
Mercer, on the Closing Date, against the receipt by CDI of the consideration
specified in Section 3.1 hereof (in the form and manner specified in Section 3.2
hereof), the Assets, free and clear of any Encumbrances except as set forth in
Schedule 2.1 to the Disclosure Schedule. The term "Assets" shall mean all of
CDI's right, title and interest in the assets, properties, goodwill and business
of
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every kind and description relating to or used in the Business as conducted as
of the Closing Date (subject to Section 2.2 below), including, without
limitation, the following:
a all supplies, equipment, office furnishings, computer equipment, and
other tangible personal property, including, without limitation, the
tangible personal property listed on Schedule 2. l(a) to the Disclosure
Schedule;
b all Intellectual Property, including, without limitation, that listed
on Schedule 2.1 (b) to the Disclosure Schedule;
c all Books and Records;
d to the extent assignable, all rights under the Assumed Contracts, each
of which is listed on Schedule 2.1(d) to the Disclosure Schedule; provided
that CDI shall retain the rights it held prior to the Closing under any
document expressly providing CDI with continuing indemnity and exculpation
rights for pre-Closing occurrences for which it remains liable under this
Agreement;
e to the extent assignable, all municipal, state and federal and other
governmental permits, licenses, registrations, agreements, waivers and
authorizations ("the Permits") held or used by CDI in connection with the
Business;
f all rights under non-disclosure and/or non-compete agreements with
employees, former employees, shareholders, former shareholders and agents
of CDI and under confidentiality agreements with third parties to the
extent relating to the Business;
g all insurance proceeds with respect to any Assets which have been
damaged or destroyed on or prior to the Closing Date and not replaced on or
prior to the Closing Date;
h all prepaid client amounts and charges for which and to the extent
services will be provided by the Business after the Closing Date;
i all Prepaid Assets, including, without limitation, those listed on
Schedule 2.1(i) to the Disclosure Schedule; and
j all other assets and rights, tangible or intangible, related to or
used in the Business, whether or not specifically referred to herein or in
any instrument of conveyance delivered pursuant hereto, and whether or not
any of such Assets have any value for accounting purposes or are carried or
reflected on or referred to in the Financial Statements, which are owned
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or possessed by CDI (other than minute books and tax records of CDI) and
are reasonably necessary to conduct the Business as presently conducted.
2 Excluded Assets. Anything herein to the contrary notwithstanding, the
Assets shall not include, and Mercer shall not purchase, any of the following,
whether owned by, held by or relating to CDI (the "Excluded Assets"):
a all cash, cash equivalents and accounts receivable owing to CDI for
services rendered prior to the Closing;
b all Employee Benefits Plans, and all trusts related thereto;
c all of CDI's rights under this Agreement and under the Ancillary
Agreements;
d any other assets specifically set forth in Schedule 2.2(d) to the
Disclosure Schedule;
e refunds in respect of Taxes paid or to be paid by CDI;
f all of CDI's rights under the Lease;
g any capital stock of CDSNC; and
h any assets or rights, tangible or intangible, which are owned or
possessed by CDSNC.
3 Exclusion of Liabilities and Obligations. Except to the extent provided in
Section 2.4 hereof, Mercer shall not assume any liabilities, obligations or
commitments of CDI or any of its Affiliates (or any predecessors of any
thereof), whether absolute, accrued, contingent, known or unknown or otherwise,
whether or not based on or arising out of or in connection with the Business or
CDI's or such Affiliates' (or such predecessors') ownership, possession, use or
operation of the Assets, whether in existence on or after the Closing Date (the
"Excluded Liabilities"), including, but not limited to, any and all liabilities
and obligations of CDI or any of its Affiliates relating to or arising out of
the following:
a any accounts payable arising out of the operation of the Business on
or prior to the Closing Date, other than those assumed under Section 2.4(b)
and set forth in Schedule 2.4(b) to the Disclosure Schedule;
b any liabilities and obligations relating to any contract, commitment,
lease, purchase order, contract for services and supplies or any other
agreement (whether written or oral) to which Mercer is not a party, other
than the Assumed Contracts;
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c any liabilities or obligations under the Assumed Contracts arising on
or prior to the Closing Date;
d any liabilities and obligations for any fee, commission or broker's or
finder's fee owed to any agent, broker, consultant, person or firm acting
on behalf of CDI or its Affiliates, which may arise by reason of or with
respect to this Agreement or any of the transactions contemplated hereby;
e any liabilities and obligations which are intercompany accounts
(between CDI and any of its Affiliates) or intracompany accounts;
f except as provided in Section 10.5, any liabilities and obligations
for Taxes of CDI or any of its Affiliates;
g any liabilities and obligations (including, without limitation, any
accounts payable) arising out of the employment and/or termination of
employment of any Employee;
h except as provided in Section 10.6, any liabilities and obligations
under or with respect to any employee benefit plan, program, contract or
arrangement (including, without limitation, any pension, incentive
compensation, bonus, life insurance, disability, medical, vacation accrual,
sabbatical and severance benefits) covering past or present employees or
their beneficiaries;
i any liabilities and obligations for infringement or misappropriation
arising from the development, modification or use of the Intellectual
Property on or before the Closing Date;
j any liabilities and obligations relating to any claim, dispute or
litigation asserted or threatened or governmental proceeding or
investigation instituted or threatened, arising out of any act or omission
of CDI on or prior to the Closing Date, or arising out of the conduct, on
or prior to the Closing Date, of the Business;
k any liabilities and obligations arising out of (i) any noncompliance
with or violation of any Environmental Law on or before the Closing Date
(ii) any existing environmental condition (whether or not relating to any
noncompliance) of the Assets or the Business, or (iii) any release of
Hazardous Materials on or before the Closing Date, in each case, regardless
of whether any of the foregoing was known to or disclosed to Mercer or any
of its Affiliates;
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l any severance and termination liabilities of CDI under any contract or
agreement to which CDI is a party which has been terminated (or under which
any employment has been terminated) prior to, on or after the Closing or
which arise as a result of the transactions contemplated by this Agreement;
m any liabilities and obligations under any insurance coverage,
self-insurance or retention program provided to customers in connection
with the Business;
n any liabilities or obligations to the extent related to or arising out
of the operations of CDI on or prior to the Closing;
o any liabilities and obligations of CDI to any shareholder or former
shareholder of CDI;
p any liabilities or obligations related to the Excluded Assets;
q any liabilities or obligations under the Lease, except for Mercer's
obligations under the Sublease; and
r any liabilities, obligations or commitments of CDSNC, whether
absolute, accrued, contingent, known or unknown or otherwise, and whether
in existence on or after the Closing Date.
4 Assumption of Certain Liabilities and Obligations. Upon the sale of the
Assets by CDI, Mercer shall assume and agree to pay, perform and discharge, in a
timely manner and in accordance with the terms thereof, the following
liabilities and obligations of CDI relating to the Business (the "Assumed
Liabilities"):
a all liabilities and obligations attributable to the performance of the
Assumed Contracts after the Closing Date, except to the extent such Assumed
Contracts are not validly assigned to Mercer or the benefits of such
Assumed Contracts are not provided by CDI to Mercer pursuant to Section 2.5
hereof, and, in any event, neither Mercer nor any of its Affiliates shall
assume any liabilities for any default or breach, or for any event,
occurrence, condition or act which, with the giving of notice, the passage
of time or both, would result in a default or breach, of any of the Assumed
Contracts to the extent such default or breach or event, occurrence,
condition or act existed on or prior to the Closing Date;
b liabilities and obligations of CDI for incentive and bonus payments
in respect of performance of its employees other than the Shareholders
during 1997 until the Closing Date to the extent set forth in Schedule
2.4(b) to the Disclosure Schedule;
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c all liabilities and obligations of Mercer specifically assumed under
the terms of the Ancillary Agreements;
d all liabilities and obligations of Mercer arising from the operation
of the Business after the Closing; and
e all liabilities and obligations of CDI attributable to the performance
after the Closing Date of the contracts listed on Schedule 2.4(e) to the
Disclosure Schedule.
5 Nonassignable Material Contracts. In the case of any Material Contracts
that are not by their terms assignable or transferable, CDI shall use
commercially reasonable efforts to obtain, or cause to be obtained, on or prior
to the Closing Date, any written consents necessary to convey to Mercer the
benefit thereof. Subject to CDI's obligations pursuant to the last sentence of
this Section 2.5, Mercer shall cooperate with CDI in such manner as may be
reasonably requested in connection therewith. In the event any consent or
approval to an assignment contemplated hereby is not obtained on or prior to the
Closing Date, CDI shall continue to use commercially reasonable efforts to
obtain any such approval or consent after the Closing Date until such time as
such consent or approval has been obtained, and CDI shall cooperate with Mercer
in any lawful and economically feasible arrangement to provide that Mercer shall
receive CDI's interest in the benefits under any such Material Contract,
including performance by CDI as agent, if economically feasible, provided that
Mercer shall undertake to pay or satisfy the corresponding liabilities for the
enjoyment of such benefit to the extent Mercer would have been responsible
therefor if such consent or approval had been obtained. CDI shall pay and
discharge any and all out-of-pocket costs of CDI seeking to obtain or obtaining
any such consent or approval whether before or after the Closing Date and shall
indemnify and hold Mercer harmless from and against any such out-of-pocket costs
of Mercer exceeding $10,000 in the aggregate.
6 Instruments of Transfer and Conveyance. The sale, conveyance, transfer,
assignment and delivery of the Assets shall be effected by delivery on the
Closing Date by CDI of such deeds, assignments, bills of sale, conveyances or
other instruments of transfer and conveyance, including, without limitation, a
bill of sale, substantially in the form of Exhibit C hereto, (collectively, the
"Asset Transfer Documents"), duly executed by CDI, as Mercer shall reasonably
deem necessary to vest in Mercer good and marketable title to such Assets, free
and clear of all Encumbrances except as set forth in Schedule 2.1 to the
Disclosure Schedule.
7 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Mercer at 1166 Avenue of the
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Americas, New York, New York, or at such other location mutually agreeable to
Mercer and CDI, at 9:00 a.m., local time, on the Business Day following the
satisfaction or waiver of all conditions to the parties set forth in Articles
VIII and IX, or at such other time or on such other date or at such other place
as Mercer and CDI may mutually agree upon in writing (the day on which the
Closing takes place is herein referred to as the "Closing Date").
Article III
PAYMENT OF PURCHASE PRICE
3.1 Purchase Price. Mercer shall purchase the Assets for an aggregate purchase
price of $33,450,000 (the "Purchase Price") as follows: (a) $32,426,870 to be
paid by Mercer to CDI in accordance with Section 3.2 below (the "Cash Purchase
Price"); and (b) the assumption by Mercer of the Assumed Liabilities.
3.2 Form and Delivery.
(a) The Cash Purchase Price will be payable by Mercer to CDI, in four
installments which shall be in the amounts, in the form, and paid on the dates
determined in the table below pursuant to (b) below:
Payment Date Column A Column B Total Payments
Closing Date $5,000,000 $ 976,870 $ 5,976,870
First anniversary
of Closing Date $5,000,000 $ 2,000,000 $ 7,000,000
Second anniversary
of Closing Date - $10,600,000 $10,600,000
Third Anniversary of Closing Date - $ 8,850,000 $ 8,850,000
$10,000,000 $22,426,870 $32,426,870
(b) The payments set forth in (a) above will be governed by the following:
(i) Subject to (ii) below, on the Closing Date the amounts in Column
A above (including the amount payable on the first anniversary of the
Closing Date) will be converted into the number of shares of MMC Stock
obtained by dividing such amounts by the "Average Price" (as defined
below) and rounding up to the nearest
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whole number of shares of MMC Stock. The "Average Price" will be
determined by calculating the average of the average daily sale prices
of MMC Stock on the consolidated report of trading of the New York
Stock Exchange issued for the five consecutive trading days ending on
the day which is six Business Days immediately before the Closing Date
(each average daily sale price to be determined by calculating the
average of the reported high and low sale price on that day).
(ii) If the closing sale price of MMC Stock on the trading day
immediately before the Closing Date is more than 10% above or below
the Average Price, then either Mercer or CDI may elect to ignore the
conversion of the amounts in Column A above to shares of MMC Stock and
have such amounts paid in cash as and when due.
(iii) The total number of shares of MMC Stock to be conveyed
hereunder shall be appropriately adjusted if Marsh & McLennan,
subsequent to the date of this Agreement and prior to the Closing
Date: (A) declares a dividend payable in shares of its common stock;
(B) splits or combines the shares of its common stock then
outstanding; (C) declares a distribution (other than its regular
quarterly non-liquidating cash dividend) on shares of its common
stock; (D) merges or consolidates with any corporation in which the
other corporation is the surviving entity; or (E) reorganizes,
recapitalizes or reclassifies any of the shares of its common stock.
(iv) If the amounts in Column A above are converted into shares of MMC
Stock, then, at the Closing, (A) Mercer shall deliver to CDI a stock
certificate evidencing the number of shares of MMC Stock to which CDI
shall be entitled to receive on the Closing Date and registered in the
name of CDI, and (B) Mercer, CDI and the Escrow Agent (as defined in
the Escrow Agreement), shall execute the Escrow Agreement,
substantially in the form of Exhibit D hereto (the "Escrow
Agreement"), and on the Closing Date the shares of MMC Stock to which
CDI shall be entitled on the first anniversary of the Closing Date
shall be delivered, on behalf of CDI, to the Escrow Agent. With
respect to any shares of MMC Stock that are subject to the Escrow
Agreement, CDI shall have the dividend and voting rights with respect
to such shares set forth in the Escrow Agreement.
(v) The amounts in Column A above which are not converted into shares
of MMC Stock and the amounts in Column B above shall be paid to CDI by
Mercer by wire transfer of same day funds in accordance with written
wire transfer instructions delivered to Mercer by CDI at least three
Business Days prior to each payment date.
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(vi) In the event that any individual identified on Exhibit E hereto
ceases to be an employee of Mercer before the third anniversary of
the Closing Date or gives notice before the third anniversary of the
Closing Date of intent to terminate employment with Mercer, then, with
respect to the portion of the Cash Purchase Price still payable to CDI
at the time such employment ceases or such notice is given (as the
case may be), the amount of such portion allocable to such individual
as set forth on Exhibit E hereto shall be forfeited by CDI. The
provisions of this Section 3.2(b)(vi) shall not apply in the case of
(A) death of an individual identified on Exhibit E hereto, (B)
Disability of an individual identified on Exhibit E hereto and (C)
involuntary termination by Mercer of an individual identified on
Exhibit E hereto other than for Cause. For purposes of this Section
3.2(b)(vi), Mercer shall have "Cause" to terminate the employment of
an individual listed on Exhibit E hereto upon (A) such individual
having been convicted of any felony involving moral turpitude or any
crime involving moral turpitude, (B) the continued and habitual use of
narcotics or alcohol to an extent which materially impairs such
individual's performance of his duties of employment on a repeated or
continuing basis, (C) willful malfeasance by such individual in the
performance of his duties of employment which is not corrected after
notice thereof, (D) the knowing, continued violation to a material
extent of any material provision of such individual's employment
agreement with Mercer, or (E) gross misconduct by such individual
materially injurious to Mercer which is not corrected after notice
thereof.
3.3 Purchase Price Allocation. CDI and Mercer agree that the allocation of the
Purchase Price shall be as set forth on Exhibit F hereto. This allocation (the
"Purchase Price Allocation") may be amended or modified by mutual agreement of
CDI and Mercer to establish a final allocation prior to the filing of the
applicable Tax Returns of CDI and Mercer. CDI and Mercer agree to use such
final allocation in all Tax Returns.
Article IV
REPRESENTATIONS AND WARRANTIES OF CDI
AND THE SHAREHOLDERS
4.1 Representations and Warranties of CDI. CDI hereby represents, warrants and
agrees as follows:
4.1.1) Existence and Good Standing. CDI is a corporation duly
organized, validly existing and in good standing under the laws of the
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Commonwealth of Massachusetts. CDI has all necessary corporate power and
authority to own, lease or license its property, including the Assets, and
to conduct the Business as it is now being conducted.
4.1.2) Financial Statements.
(a) The financial statements of CDI as of December 31, 1994, December
31, 1995 and December 31, 1996 and for the periods then ended,
together, in each case, with all related notes (if any) and schedules
thereto, are attached as Schedule 4.1.2 (a) to the Disclosure Schedule
(collectively, the "Financial Statements"). The Financial Statements
(i) have been prepared in conformity with the accounting basis set
forth in Schedule 4.1.2(a)(i) to the Disclosure Schedule, consistently
applied, (ii) fairly present in all material respects the financial
position of and the results of operations of CDI as of such dates and
for the periods then ended, and (iii) were prepared from and are in
agreement with the Books and Records.
(b) The financial statements of CDI as of September 30, 1997 and for
the nine-month period then ended are attached as Schedule 4.1.2(b) to
the Disclosure Schedule (hereinafter referred to as the "Interim
Statements"). The Interim Statements (i) have been prepared in
accordance with the accounting basis set forth in Schedule 4.1.2(b)(i)
to the Disclosure Schedule, consistently applied, (ii) fairly present
in all material respects the financial position of and the results of
operations of CDI as of the date thereof and for the period then
ended, subject to normal year end adjustments which would not in the
aggregate have Material Adverse Effect on the financial position of or
the results of operations of CDI as reflected in the Interim
Statements and any other adjustments expressly described therein or in
the notes thereto, and (iii) were prepared from and are in agreement
with the Books and Records.
(c) The revenues set forth in the Financial Statements and the
Interim Statements represent in all material respects the amounts
billed to third parties for services and expenses, as well as interest
income of the Business during each of the periods covered thereby.
4.1.3) No Undisclosed Liabilities. Except as set forth in Schedule 4.1.3 to
the Disclosure Schedule or as would not (individually or in the aggregate) have
a Material Adverse Effect, CDI has no liabilities or obligations of any nature
(whether known or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due, asserted or
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unasserted, matured or unmatured) which were not fully reflected or reserved
against in the Interim Statements.
4.1.4) Books and Records. Except as set forth in Schedule 4.1.4 to the
Disclosure Schedule, all accounts, books, ledgers, operating information, data
and official and other records necessary for the operation of the Business are
included in the Books and Records. All such accounts, books, ledgers and
official and other financial records of the Business, taken as a whole, have
been fully, properly and accurately kept and are complete in all material
respects, and have been provided to Mercer.
4.1.5) Warranties. Except as set forth (a) in Schedule 4.1.5 to the
Disclosure Schedule or (b) in the Assumed Contracts, in the conduct of the
Business, CDI does not make and has not made any written representation or
warranty to its customers with respect to products sold or services performed by
it.
4.1.6) Material Contracts.
(a) Schedule 4.1.6 to the Disclosure Schedule sets forth or refers to the
Assumed Contracts (which are listed on Schedule 2.1(d) to the Disclosure
Schedule) together with all other written or, to the Knowledge of CDI,
other bona fide agreements, contracts, leases, purchase orders and
commitments, the benefits of which are to be provided by CDI to Mercer
pursuant to Section 2.5 hereof (collectively, the "Material Contracts"),
which constitute all agreements, contracts, leases, purchase orders and
commitments to which CDI is bound other than agreements, contracts, leases,
purchase orders and commitments that are not, individually or in the
aggregate, material to the Business as currently conducted. Schedule 4.1.6
to the Disclosure Schedule also accurately categorizes each of the Material
Contracts as a "Lease", "Employee-Related Agreement", "Intellectual
Property-Related Agreement", "Vendor Agreement", "Client Agreement" or
"Other Agreement". CDI has previously delivered or made available to
Mercer correct and complete copies of each of the written Material
Contracts. Schedule 4.1.6 to the Disclosure Schedule also includes a list
and brief description of all powers of attorney now in effect granted by
CDI with respect to the Business.
(b) Each of the Material Contracts is a legal, valid and binding agreement
enforceable by and against CDI in accordance with its terms and in full
force and effect. Except as otherwise disclosed on Schedule 4.1.6 to the
Disclosure Schedule, CDI has not received any written or, to the Knowledge
of CDI, other bona fide
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notice of cancellation or termination under any option or right reserved to
the other party to any Material Contract or any written or, to the
Knowledge of CDI, other bona fide notice of default under such agreement.
Except as otherwise disclosed on Schedule 4.1.6 to the Disclosure Schedule,
CDI is not and, to the Knowledge of CDI, no other party is, in material
breach or material default of any Material Contract and, to the Knowledge
of CDI, no event has occurred that, with the giving of notice or the lapse
of time or both, would constitute such a breach or permit termination,
modification or acceleration under any Material Contract. Except as
specifically identified in Schedule 4.1.6 to the Disclosure Schedule, no
approval or consent of any person is needed in connection with the
assignment of the Material Contracts to Mercer.
4.1.7) Litigation. Except as set forth in Schedule 4.1.7 to the Disclosure
Schedule, there is no claim, action, suit, proceeding at law or in equity,
arbitration or administrative or similar proceeding by or before (or, to the
Knowledge of CDI, any investigation by) any governmental or other
instrumentality or agency, pending, or, to the Knowledge of CDI, threatened,
against or affecting the Assets, the Assumed Liabilities or the Business,
(including, without limitation, any pending, or to the Knowledge of CDI,
threatened warranty claims relating to products at any time sold or services at
any time performed by CDI relating to the Business). There are no such claims,
actions, suits, proceedings or investigations pending or, to the Knowledge of
CDI, threatened against CDI, seeking to prevent or challenging the transactions
contemplated by this Agreement. CDI is not subject to any Order entered in any
lawsuit or proceeding which may have a Material Adverse Effect on (i) the
Assets, (ii) the Business or (iii) CDI's ability to consummate the transactions
contemplated hereby or under the Ancillary Agreements.
4.1.8) Returns; Taxes. Except as set forth in Schedule 4.1.8 to the
Disclosure Schedule:
(a) All Returns required to be filed with respect to taxable periods or
portions of periods ending on or prior to the Closing have been or will be
filed on a timely basis and in correct form in all material respects.
Schedule 4.1.8 to the Disclosure Schedule lists all of the jurisdictions in
which CDI and the Business have filed Returns during the 1997, 1996, 1995
and 1994 calendar years. CDI has provided to Mercer true and complete
copies of all such Returns. To the Knowledge of CDI, as of the time of
filing, the foregoing Returns correctly reflected in all material respects
the facts regarding the income, business, assets, operations, activities,
status or other matters of CDI the Business or the Assets, as the case may
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be, or any other information required to be shown thereon. No written
claim has ever been made by an authority in a jurisdiction where any of CDI
the Business or the Assets does not file Returns that it is or may be
subject to taxation by that jurisdiction.
(b) To the Knowledge of CDI, with regard to all Taxes for which CDI is or
could be liable, with respect to all taxable periods or portions of periods
ending on or before the Closing Date, all such amounts required to be paid
by CDI prior to the Closing Date have been, or by the Closing Date will be,
paid in full on a timely basis, except for such amounts which would not
have a Material Adverse Effect. To the Knowledge of CDI, proper and
accurate amounts have been withheld and remitted by CDI and the Business
from and in respect of its current and former employees, independent
contractors, creditors and other third parties for all periods in
compliance in all material respects with the Tax withholding provisions of
all applicable laws and regulations, except for such amounts which would
not have a Material Adverse Effect.
(c) Except as set forth in Schedule 4.1.8 to the Disclosure Schedule,
there is no currently pending audit of any Return that includes or is
required to include any information relating to CDI, the Assets or the
Business, nor has CDI received any written notice of audit. No consent is
in effect to extend the statute of limitations for the assessment of any
Taxes with respect to CDI the Assets or the Business.
4.1.9) Intellectual Property. Schedule 4.1.9 to the Disclosure Schedule
lists and describes in reasonable detail all Intellectual Property that is
material to the conduct of the Business. Such Schedule separately lists all
patents, patent licenses and patent applications, copyrights and copyright
applications, trademarks, trade names, service marks and logos that are included
within such Intellectual Property and, with respect to each of the foregoing,
indicates whether it has been registered or an application for registration is
pending (which indication shall include the registration or application number,
the applicable filing authority and jurisdiction and the date of such
registration or application). Schedule 4.1.9 to the Disclosure Schedule sets
forth all material written licenses, agreements and other rights granted by CDI
to any third party with respect to the Intellectual Property and all material
written licenses, agreements and other rights with respect to the Intellectual
Property granted by any third party to CDI, in each case together with a
description of the subject matter licensed. Except as set forth on Schedule
4.1.9 to the Disclosure Schedule, CDI is not and, to CDI's Knowledge, no third
party is in material default under any of such licenses, agreements or other
rights, and there exists no event,
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occurrence, condition or act (including the sale of the Assets hereunder) which,
with the giving of notice, the lapse of time or the happening of any other event
or condition, would become a default thereunder. Schedule 4.1.9 to the
Disclosure Schedule also sets forth a list of all registries, including the
United States Patent and Trademark Office and United States Copyright Office,
where any of the Intellectual Property is registered or subject to a pending
application for registration.
4.1.10) Compliance with Laws. CDI is in, and the Business has been operated
in, compliance with all laws, regulations and Orders to the extent applicable to
the Business and the Assets, as such laws, regulations and Orders are currently
applied by applicable governmental authorities, except where non-compliance
would not have a Material Adverse Effect.
4.1.11) Insurance. Set forth in Schedule 4.1.11 to the Disclosure Schedule is
a complete list of insurance policies which CDI maintains with respect to the
Business, the Assets or both, together with a description with respect to each
policy of the amount and types of coverage, limits and deductibles, inception
and expiration dates and insurance carrier. Except as would not have a Material
Adverse Effect, such policies are and will be continued in full force and effect
at least until the Closing Date. Such policies, with respect to their amounts
and types of coverage, comply with all applicable laws and regulations.
4.1.12) Employees.
(a) Except as set forth in Schedule 4.1.12(a) to the Disclosure Schedule,
all persons employed primarily in connection with the Business (the
"Employees") are currently employed by CDI. Set forth in Schedule
4.1.12(a) to the Disclosure Schedule is an accurate and complete list, as
of October 31, 1997, of the names of all Employees, together with the
following information with respect to each such Employee: (i) office
location, (ii) job title of such Employee, (iii) initial date of hire and,
if different, most recent date of hire, (iv) last review date, (v) next
review date, (vi) base compensation, (vii) additional compensation (or the
terms thereof, if determined pursuant to a scale or formula), if any, and
(viii) accrued but unused vacation time as of October 31, 1997. Except as
set forth in Schedule 4.1.12(a) to the Disclosure Schedule, CDI has not
promised or agreed to give any Employee a pay raise or any additional
compensation other than with respect to an annual review in the ordinary
course of business consistent with past practice or as may be required by
law, or by any contract or other agreement listed on Schedule 4.1.12(a) to
the Disclosure Schedule.
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(b) Schedule 4.1.12(b) to the Disclosure Schedule sets forth an accurate
and complete list of each pension, profit-sharing, bonus, incentive, stock
option or purchase, insurance, severance or other employee or retiree
benefit plan (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of ERISA) in which any of the Employees participate
(the "Employee Benefit Plans"). CDI is in compliance in all material
respects with all applicable provisions of law with respect to each
Employee Benefit Plan, and there are no material pending or to CDI's
Knowledge, threatened claims by or on behalf of any of the Employee Benefit
Plans. No liability has been or is expected to be incurred by CDI, any
Affiliate or the Business (either directly or indirectly, including as a
result of an indemnification obligation) under or pursuant to Title I or
Title IV of ERISA or the penalty, excise tax or joint and several liability
provisions of the Code. To CDI's Knowledge, the consummation of the
transactions contemplated hereby will not (i) impose any obligation or
liability on Mercer or any Affiliate in respect of any Employee Benefit
Plan or entitle any current or former employee of CDI to compel Mercer or
any Affiliate to maintain any particular types of employee benefit plans
and/or levels of coverage thereunder, or (ii) give rise to any Encumbrance
on the Assets or the Business.
4.1.13) Labor Relations. Except as set forth in Schedule 4.1.13 to the
Disclosure Schedule, since January 1, 1992, (a) to CDI's Knowledge, CDI has not
and is not engaged in any unfair labor practice with respect to any Employee;
(b) no unfair labor practice complaint has been brought or is pending before the
National Labor Relations Board with respect to any Employee, (c) there has been
no labor strike, dispute, slowdown or stoppage, nor is there any now pending or,
to the Knowledge of CDI, threatened involving any Employee; (d) to CDI's
Knowledge, no representation question has been raised or now exists respecting
the Employees; (e) CDI has not been notified of any material grievance and no
arbitration proceeding arising out of or under any collective bargaining
agreement has been brought or is pending with respect to any Employees; and (f)
CDI has not been and is not a party to any collective bargaining agreement with
respect to the Business.
4.1.14) Clients and Suppliers. Schedule 4.1.14 to the Disclosure Schedule
sets forth a list of the name and address of each client of the Business for
which CDI performed services during calendar 1997, together with a description
of (a) the services performed for such client, (b) the contract, lease, license
or other arrangement pursuant to which such client has purchased such services,
(c) the remaining term of such contract, lease,
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license or other arrangement, (d) the amount of revenues anticipated to be
received from such client under such contract, lease, license or other
arrangement during calendar year 1997 (excluding December 1997), and (e) the
amount of revenues anticipated to be received from such client under such
contract, lease, license or other arrangement during December 1997 and the first
three months of calender year 1998, including the probability factor which the
Company has assigned to such revenues in accordance with its regular method of
internal forecasting. Schedule 4.1.14 to the Disclosure Schedule sets forth a
list of all outstanding purchase commitments and orders of CDI to make purchases
with respect to the Business which are in excess of $10,000 or are not in the
ordinary course of business of the Business. Except as set forth in Schedule
4.1.14 to the Disclosure Schedule, no supplier of the Business during calendar
1997 has given written or, to the Knowledge of CDI, other bona fide notice to
CDI that it will, as a result of the transactions contemplated by this Agreement
or otherwise, cancel or otherwise terminate or materially reduce, or, to the
Knowledge of CDI, threatened to cancel, terminate or materially reduce its
relationship with CDI other than in the ordinary course of business consistent
with past experience, and CDI has no Knowledge of the intention of any such
supplier of the Business to do so.
4.1.15) Sufficiency of Assets. The Assets are, together with the rights
granted to Mercer under this Agreement and the Ancillary Agreements and the
employment of the CDI personnel, sufficient to conduct the Business as presently
conducted and to provide the services currently provided by the Business. There
are no material assets or property necessary for the conduct of the Business as
presently conducted which are not owned, leased or licensed by CDI.
4.1.16) Subsidiaries. CDI owns no subsidiaries that own or otherwise hold any
assets used in the conduct of the Business, or participate in the conduct of the
Business, except for CDSNC, which is in liquidation.
4.1.17) Environmental Laws and Regulations. Except as set forth in Schedule
4.1.17 to the Disclosure Schedule, (a) CDI has not, and, to the Knowledge of
CDI, no other Person has, generated, used, treated, disposed of, released or
stored Hazardous Materials on, or transported Hazardous Materials in any
material quantities to or from, any property that will be leased or subleased to
Mercer, (b) CDI is in compliance in all material respects with applicable
Environmental Laws and the requirements of any permits issued under such
Environmental Laws with respect to any such property and (c) to the Knowledge of
CDI, there are no pending or threatened claims, suits, demands, investigations,
proceedings or other actions relating to any Environmental Law with respect to
any such property, nor is there a reasonable basis for any such actions. After
the
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Closing Date, CDI will not intentionally store, generate, use, treat or
transport to or from any portion of the property leased or subleased to Mercer
any Hazardous Materials in any material quantities.
4.1.18) Affiliate Transactions. Schedule 4.1.18 to the Disclosure Schedule
sets forth a list of all written or, to the Knowledge of CDI, other bona fide
contracts, agreements, or arrangements of any material nature whatsoever
relating to the Business between CDI, on the one hand, and any Affiliate of CDI,
on the other hand, necessary in any material respect to the conduct of the
Business as presently conducted, except as may be listed among the Assumed
Contracts.
4.1.19) Capital Expenditures. Except as set forth on Schedule 4.1.19 to the
Disclosure Schedule, there are no capital projects or capital expenditures
currently committed for or undertaken by CDI with respect to the Business that
are not paid for on the date hereof.
4.1.20) Disclosure. None of this Agreement, the Disclosure Schedule, the
Ancillary Agreements, the Financial Statements or any Schedule, Exhibit or
certificate attached hereto or thereto or delivered in accordance with the terms
hereof or thereof, taken as a whole, contains any untrue statement of a material
fact or, to the Knowledge of CDI, omits any statement of a material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
4.1.21) Broker's or Finder's Fees. No agent, broker, Person or firm acting on
behalf of CDI is, or will be, entitled to any fee, commission or broker's or
finder's fees from any of the parties hereto, or from any Affiliate of any of
the parties hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
4.1.22) Ability to Conduct Business. Except as set forth in Schedule 4.1.22
to the Disclosure Schedule, CDI is not party to any written or, to the Knowledge
of CDI, other bona fide contract or agreement containing covenants that (a)
limit the complete and unconditional freedom of CDI to compete in any line of
business presently conducted by CDI, or to otherwise carry on the Business as
presently conducted, with any person anywhere in the world or (b) require CDI to
conduct business with any person on an exclusive basis or otherwise limit the
right of the CDI to provide consulting advice or services to another client.
4.1.23) HSR Status. CDI is not "a person not engaged in manufacturing which
has total assets of $10,000,000 or more" as defined under the HSR Act.
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4.1.24) CDI: Consents and Approvals; No Violations. Except as set forth in
Schedule 4.1.24 to the Disclosure Schedule, the execution, delivery and
performance of this Agreement and the Ancillary Agreements by CDI and the
consummation by CDI of the transactions contemplated hereby and thereby will
not, with or without the giving of notice, the termination of any grace
period or both: (i) violate, conflict with, or result in a breach or default
under any provision of its organizational documents; (ii) violate any
statute, ordinance, rule, regulation, order, judgment or decree of any court
or of any governmental or regulatory body, agency or authority applicable to
CDI or by which any of its properties or assets or the Assets or the Business
may be bound; (iii) require any filing by CDI with, or require it to obtain
any permit, consent or approval of, or require any party to give any notice
to, any governmental or regulatory body, agency or authority; or (iv) except
as would not, individually or in the aggregate, have a Material Adverse
Effect, result in a violation or breach by CDI of, conflict with, constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation, payment or acceleration) under, or
result in the creation of any Encumbrance upon any of the Assets under, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, franchise, permit, agreement, lease, franchise agreement
or other instrument or obligation to which CDI is a party, or by which CDI or
any of its material properties or assets or the Assets or the Business may be
bound.
4.2 Representations and Warranties of CDI and the Shareholders. CDI and each
of the Shareholders jointly and severally hereby represent, warrant and agree as
follows:
4.2.1) Authorization and Validity of Agreements.
(a) CDI has the power and authority to execute and deliver (i) this
Agreement and (ii) the Escrow Agreement, the Registration Rights Agreement,
the License Agreement, the Name Assignment, and all other agreements or
instruments to be executed and delivered by it in connection with the
transactions contemplated hereby (collectively, the "Ancillary
Agreements"), to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by CDI of this Agreement has been, and
at the Closing each of the Ancillary Agreements will be, and the
consummation by CDI of the transactions contemplated hereby and thereby
have been, duly and validly authorized and approved by all necessary
corporate action of CDI. This Agreement has been, and at the Closing each
of the Ancillary Agreements will be, duly and validly executed and
delivered by CDI and (assuming due
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authorization, execution and delivery by Mercer or Marsh & McLennan, as the
case may be), this Agreement constitutes, and upon their execution at the
Closing each Ancillary Agreement will constitute, a valid and binding
obligation of CDI enforceable against it in accordance with their
respective terms.
(b) Each of the Shareholders has the power and authority to execute and
deliver this Agreement and each of the Ancillary Agreements to which he is
a party. This Agreement has been, and at the Closing each of the Ancillary
Agreements will be, duly and validly executed and delivered by each
Shareholder which is a party thereto and (assuming due authorization,
execution and delivery by Mercer or Marsh & McLennan, as the case may be),
this Agreement constitutes, and upon their execution at Closing, each
Ancillary Agreement will constitute, a valid and binding obligation of each
Shareholder which is a party thereto enforceable against him in accordance
with its terms.
4.2.2) Shareholders: Consents and Approvals; No Violations. Except as set
forth in Schedule 4.2.2 to the Disclosure Schedule, the execution, delivery and
performance of this Agreement and the Ancillary Agreements by each Shareholder
and the consummation by each Shareholder of the transactions contemplated hereby
and thereby will not, with or without the giving of notice, the termination of
any grace period or both: (i) violate any statute, ordinance, rule, regulation,
order, judgment or decree of any court or of any governmental or regulatory
body, agency or authority applicable to such Shareholder; (ii) require any
filing by such Shareholder with, or require him to obtain any permit, consent or
approval of, or require any party to give any notice to, any governmental or
regulatory body, agency or authority; or (iii) except as would not, individually
or in the aggregate, have a Material Adverse Effect, result in a violation or
breach by such Shareholder of, conflict with, constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, payment or acceleration) under, or result in the
creation of any Encumbrance upon any of the Assets under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or other instrument or
obligation to which such Shareholder is a party, or by which such Shareholder
may be bound.
4.2.3) Changes in Assets. Except as set forth in Schedule 4.2.3 to the
Disclosure Schedule, since September 30, 1997, CDI has not sold, transferred or
otherwise disposed of any of the Assets, except in the ordinary course of
business, consistent with past practice.
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4.2.4) Title to Properties; CDI Shares.
(a) Except as set forth in Schedule 4.2.4(a) to the Disclosure Schedule,
CDI has good title to each of the Assets, free and clear of all
Encumbrances of any kind, except Encumbrances which do not, individually or
in the aggregate, materially detract from the value of any Asset or impair
the use of any Asset by Mercer in the operation of the Business.
(b) Schedule 4.2.4(b) to the Disclosure Schedule sets forth the beneficial
ownership of the CDI Shares. The CDI Shares constitute all the authorized,
issued and outstanding shares of capital stock of CDI. Except as set forth
in Schedule 4.2.4(b) to the Disclosure Schedule, (i) there are no options,
warrants or rights of conversion of CDI obligating CDI to issue or sell any
of its shares of capital stock and (ii) there are no voting trusts,
stockholder agreements, proxies or other agreements in effect with respect
to the voting or transfer of the CDI Shares.
4.2.5) Intellectual Property. Except as set forth in Schedule 4.2.5 to the
Disclosure Schedule, CDI in all cases either owns and possesses all right, title
and interest in or to, or has the right to use, the Intellectual Property,
except where the failure to do so would not, individually or in the aggregate,
have a Material Adverse Effect. None of the Intellectual Property infringes
upon, or constitutes a misappropriation of, any copyright, patent, trade secret
or other proprietary right of any third party in a manner that would allow any
third party to make a claim for damages against Mercer with respect to the use
of any Intellectual Property by Mercer in the operation of the Business in the
United States. To the Knowledge of CDI and the Shareholders, none of the
Intellectual Property infringes upon, or constitutes a misappropriation of, any
copyright, patent, trade secret or other proprietary right of any third party in
a manner that would allow any third party to enjoin or otherwise impair the use
of any Intellectual Property by Mercer in the operation of the Business in the
United States. Except as set forth in Schedule 4.2.5 to the Disclosure
Schedule, (a) all of the Intellectual Property is free and clear of all
Encumbrances; (b) no written or, to the Knowledge of CDI or any Shareholder,
other bona fide claim by any third party contesting the validity,
enforceability, use or ownership of any Intellectual Property has been made or
to CDI's or any Shareholder's Knowledge is threatened; (c) CDI has not received
any written or, to the Knowledge of CDI or any Shareholder, other bona fide
notice of any claims of infringement or misappropriation of, or conflict with,
any intellectual property of any third party in connection with the Business;
(d) to the Knowledge of CDI and the Shareholders, all Intellectual Property will
be owned by or available
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for use by Mercer on commercially equivalent terms and conditions immediately
subsequent to the Closing Date; (e) CDI has not waived (in writing or, to the
Knowledge of CDI or any Shareholder, in any other bona fide manner) any rights
to the Intellectual Property; and (f) CDI has made all necessary filings and
recordations and have paid all required fees and taxes to record and maintain
its ownership of its patented or registered Intellectual Property in the United
States Patent and Trademark Office, United States Copyright Office and all other
applicable federal, state or foreign registries.
4.2.6) Employees. Except as set forth in Schedule 4.2.6 to the Disclosure
Schedule or as disclosed after the date hereof in writing to Mercer, no Employee
has given written or, to the Knowledge of CDI or any Shareholder, other bona
fide notice to terminate his or her employment.
4.2.7) Clients. Except as set forth in Schedule 4.2.7 to the Disclosure
Schedule, no client for which CDI performed services during calendar 1997 has
given written, or to the Knowledge of CDI or any Shareholder, other bona fide
notice to CDI that it will, as a result of the transactions contemplated by this
Agreement or otherwise, cancel or otherwise terminate or materially reduce, or,
to the Knowledge of CDI or any Shareholder, threatened in writing or by other
bona fide notice to cancel, terminate or materially reduce, its relationship
with CDI other than in the ordinary course of business consistent with past
experience, and neither CDI nor any Shareholder has any Knowledge of the bona
fide intention of any such client of the Business to do so, other than in the
ordinary course of business consistent with past experience.
4.2.8) Information in Registration Statement. None of the information
supplied or to be supplied by CDI or the Shareholders for inclusion or
incorporation by reference in the Registration Statement will, at the time it is
filed with the SEC and at the time it becomes effective under the 1933 Act,
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.
4.2.9) Acquisition for Investment.
(a) CDI and each Shareholder is either an "accredited investor" within the
meaning of Rule 501 (a) promulgated under the 1933 Act or (ii) by reason of
CDI's or such Shareholder's business and financial experience and the
business and financial experience of those persons retained by CDI or such
Shareholder to advise CDI or such Shareholder with respect to CDI's or such
Shareholder's
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investment in MMC Stock, CDI or such Shareholder, together with such
advisors, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of
CDI's or such Shareholder's prospective investment in MMC Stock and is able
to bear the economic risk of such investment.
(b) CDI and each Shareholder is acquiring the MMC Stock not with a view
toward or for resale in connection with any distribution thereof in
violation of the 1933 Act, or with any intention of distributing or selling
MMC Stock in violation of the 1933 Act, and CDI and each such Shareholder
will not sell or offer to sell or otherwise transfer MMC Stock in violation
of the 1933 Act.
(c) CDI and each Shareholder acknowledges that representatives of CDI and
the Shareholders have been, on behalf of CDI and all Shareholders, provided
an opportunity to examine all documents and ask questions of, and has
received answers thereto from, Marsh & McLennan and its representatives
regarding the business, management, and financial affairs of Marsh &
McLennan and its subsidiaries, and such representatives have obtained all
traditional information requested by them of Marsh & McLennan and its
subsidiaries and their respective representatives to verify the accuracy of
all information furnished to them regarding the acquisition of MMC Stock.
(d) CDI and each Shareholder understands that (i) the MMC Stock has not
been registered under the 1933 Act, by reason of its issuance in a
transaction exempt from the registration requirements of the 1933 Act
pursuant to Section 4(2) thereof, (ii) the MMC Stock must be held
indefinitely unless a subsequent disposition thereof is registered under
the 1933 Act or is exempt from such registration, (iii) the certificates
representing shares of MMC Stock shall bear a legend to such effect (as set
forth in Section 6 of the Registration Rights Agreement) and (iv) Marsh &
McLennan will make a notation on its transfer books to such effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MERCER
Mercer hereby represents, warrants and agrees as follows:
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5.1 Existence and Good Standing of Mercer; Power and Authority. Mercer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Mercer has full corporate power and authority to
execute and deliver this Agreement and the Ancillary Agreements, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Mercer of this Agreement has been, and at the Closing each of the Ancillary
Agreements will be, and the consummation by Mercer of the transactions
contemplated hereby and thereby have been, duly and validly authorized and
approved by all necessary corporate action of Mercer. This Agreement has been,
and at the Closing each of the Ancillary Agreements will be, duly and validly
executed and delivered by Mercer and (assuming due authorization, execution and
delivery by CDI and each of the Shareholders which is a party thereto), this
Agreement constitutes, and upon their execution at the Closing each Ancillary
Agreement will constitute, a valid and binding obligation of Mercer enforceable
against Mercer in accordance with their respective terms.
5.2 Consents and Approvals; No Violations. The execution, delivery and
performance of this Agreement and the Ancillary Agreements by Mercer and the
consummation by Mercer of the transactions contemplated hereby and thereby will
not, with or without the giving of notice or the lapse of time or both: (a)
violate, conflict with, or result in a breach or default under any provision of
the certificate of incorporation or by-laws of Mercer; (b) violate any statute,
ordinance, rule, regulation or Order of any court or of any governmental or
regulatory body, agency or authority applicable to Mercer or by which any of its
properties or assets may be bound; (c) require any filing by Mercer with, or
require Mercer to obtain any permit, consent or approval of, or require Mercer
to give any notice to, any governmental or regulatory body, agency or authority
or any other Person; or (d) result in a violation or breach by Mercer of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default by Mercer (or give rise to any right of termination, cancellation,
payment or acceleration) under, or result in the creation of any Encumbrance
upon any of the properties or assets of Mercer under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or other instrument or
obligation to which Mercer is a party, or by which Mercer or any of its
properties or assets may be bound.
5.3 Litigation. There are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of Mercer, threatened, seeking to
prevent or challenging the transactions contemplated by this Agreement. Mercer
is not subject to any Order entered in any lawsuit or proceeding which may have
a material adverse effect on Mercer' s ability to consummate the transactions
contemplated hereby or under the Ancillary Agreements.
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5.4 Broker's or Finder's Fees. No agent, broker, Person or firm acting on
behalf of Mercer or any of its Affiliates is, or will be, entitled to any fee,
commission or broker's or finder's fees from any of the parties hereto, or from
any Affiliate of any of the parties hereto, in connection with this Agreement or
any of the transactions contemplated hereby.
5.5 Existence and Good Standing of Marsh & McLennan. Marsh & McLennan is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
5.6 Corporate Authority of Marsh & McLennan. This Agreement, the Registration
Rights Agreement and all transactions contemplated hereby will not result in a
violation of the Certificate of Incorporation or By-Laws of Marsh & McLennan or
any material agreement to which it is a party or by which it is bound, or any
law, rule, license, regulation, judgment, order or decree governing or affecting
the business of Marsh & McLennan in any material respect.
5.7 MMC Stock. The MMC Stock to be delivered pursuant to this Agreement has
been duly authorized and will, when so delivered, be validly issued and
outstanding, fully paid and non-assessable.
5.8 Information. Mercer has delivered or otherwise made available to CDI and
each Shareholder each report, proxy statement and information statement prepared
by Marsh & McLennan since December 31, 1996, including without limitation, the
Annual Report to Stockholders for the fiscal year ended December 31, 1996, the
Annual Report on Form 10K for the fiscal year ended December 31, 1996, the Proxy
Statement, dated March 31, 1997, for the 1997 Annual Meeting of Stockholders,
the Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 1997,
June 30, 1997 and September 30, 1997, and the Current Reports on Form 8-K dated
March 12, 1997, March 27, 1997, and October 10, 1997, each in the form
(including exhibits and any amendments thereto) filed with the SEC (each such
report, proxy statement or information statement an "MMC Report"). As of their
respective dates, the MMC Reports did not, and any MMC Reports filed with the
SEC subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading. Each of the consolidated balance sheets
included in or incorporated by reference into the MMC Reports (including the
related notes and schedules) fairly presents, or will fairly present, in all
material respects, the results of operations, retained earnings and cash flows,
as the case may be, of Marsh & McLennan and its subsidiaries for the periods
set forth therein (subject, in the case of unaudited statements, to the notes
and normal year-end audit adjustments that will not be material in amount or
effect), in each case in accordance with GAAP.
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Article VI
COVENANTS OF CDI AND THE SHAREHOLDERS
CDI and, with respect to the last sentence of Section 6.1 and Section 6.9 only,
each of the Shareholders hereby covenant and agree with Mercer as follows:
6.1 Cooperation. CDI shall use commercially reasonable efforts, and shall
reasonably cooperate with Mercer, to secure all material consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable CDI to effect the transactions contemplated hereby, and CDI
shall otherwise use commercially reasonable efforts to cause the consummation of
such transactions in accordance with the terms and conditions hereof. Prior to
the Closing Date, CDI and the Shareholders agree to deliver to Mercer prompt
written notice of any event or condition known to CDI or any Shareholder, which,
if it existed on the date of this Agreement, would result in any of the
representations and warranties of CDI and the Shareholders contained herein
being untrue in any material respect.
6.2 Conduct of Business. Except as Mercer may otherwise consent to in writing,
which consent shall not be unreasonably withheld, from the date hereof to and
including the Closing Date, CDI shall: (a) conduct the Business only in the
ordinary course consistent with past practice with the purpose of preserving the
business organization of the Business intact; (b) maintain satisfactory
relationships with, and preserve the goodwill of, licensers, suppliers, vendors,
lessors, distributors, customers and others having relationships with the
Business; (c) use reasonable efforts to keep available to Mercer the services of
the Employees; (d) maintain, consistent with past practice, all of the Assets in
good repair, order and condition, ordinary wear and tear excepted, and
insurance, self-insurance and retention programs applicable to all the Assets
used in the conduct of the business in such amounts and of such kinds comparable
to that in effect on the date hereof; and (e) maintain the Books and Records in
the usual, regular and ordinary manner, on a basis consistent with past
practice. Notwithstanding the immediately preceding sentence, pending the
Closing Date and except as may be approved in writing by Mercer, which approval
will not be unreasonably withheld, or as is otherwise expressly, contemplated,
permitted or required by this Agreement, CDI in the conduct of the Business
will not: (i) transfer, sell, encumber or otherwise convey any of the Assets
other than in the ordinary course of business consistent with past practice;
(ii) incur any material obligations or liabilities (absolute or contingent),
except for obligations herein and except current liabilities incurred, and
obligations under contracts entered into, in the ordinary course of business
consistent with past practice; (iii) grant or agree to grant any bonuses to any
Employees, effect any general increase in the rates of salaries or compensation
of Employees or any specific increase to any Employee,
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except as may be required by law or by any contract or other agreement which has
been disclosed to Mercer; (iv) commit to provide any additional pension,
retirement or other employment benefits to any Employees, or any increase in any
existing benefits for such Employees, except as may be required by law or by any
contract or agreement which has been disclosed to Mercer; (v) accept any new
assignment or change the terms of any existing assignment, whether pursuant to a
written agreement or otherwise, to provide for compensation in any form other
than cash under standard business terms (e.g., no contingent fee reimbursement);
and (vi) agree, whether or not in writing, to do any of the foregoing.
6.3 Review of the Assets.
(a) Mercer may, prior to the Closing Date, through its representatives,
review (i) the Assets and (ii) the operating information and data relating
to the Business and the Books and Records and such other information
relating to the financial and legal condition of the Business as Mercer
deems reasonably necessary or advisable to familiarize itself with such
Assets and the conduct of the Business. Such review shall occur only
during normal business hours upon reasonable notice by Mercer and shall be
conducted in a manner that does not unreasonably interfere with the
operations of the Business. CDI shall permit Mercer and its
representatives to have full access to employees of CDI who can furnish
Mercer with financial and operating data and other information with respect
to the Assets and the Business as Mercer shall from time to time
reasonably request.
(b) Notwithstanding anything to the contrary contained in this Agreement,
neither Mercer's or any of its Affiliates' review of any matters related to
the transactions contemplated by this Agreement, including, without
limitation, any review of the Assets, the Business and the financial and
other conditions of CDI conducted by the officers, employees, lawyers,
accountants, consultants and other representatives or agents of Mercer or
any of its Affiliates, nor the knowledge of Mercer or any of its Affiliates
with respect to any such matters, whether or not resulting from any such
review, shall affect (i) the representations and warranties made by CDI and
the Shareholders in or pursuant to this Agreement, the Disclosure Schedule,
the Ancillary Agreements or in the Schedules or Exhibits attached hereto or
thereto, (ii) the remedies of Mercer for breaches of such representations
and warranties or (iii) the Excluded Liabilities.
6.4 Notice of Sale. As reasonably requested by Mercer, from time to time
within the first 30 days following the Closing Date, CDI will promptly prepare
and mail notices to the other party under any of the Assumed Contracts, advising
such other party that such Assumed Contract has been assigned to Mercer and
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directing such other party to sent to Mercer all future notices, correspondence
and payments relating to such Assumed Contract. CDI will provide Mercer with
copies of all such notices for Mercer' s approval prior to any such mailing.
6.5 Non-Competition; Non-Solicitation; Non-Interference.
(a) In order to induce Mercer to purchase the Assets and the Business
pursuant to this Agreement, CDI hereby covenants and agrees that for a five
year period following the Closing Date, within the United States and
Europe, it will not, directly or indirectly:
(i) own, manage, operate, control or invest in any Person that
provides or performs services that are the same as or substantially
similar to, or competitive with, the Business (or any portion
thereof);
(ii) promote, market, perform or provide any services that are the
same as, substantially similar to, or competitive with, the Business
(or any portion hereof), whether on behalf of itself or others,
(iii) enter into any agreement with any Person (other than Mercer
or any of its Affiliates) pursuant to which services which are the
same as, substantially similar to, or competitive with, the Business
(or any portion thereof) are to be provided;
(iv) persuade or attempt to persuade any customer of the Business not
to purchase any of the products or services provided by Mercer and its
Affiliates;
(v) disclose, furnish, or make accessible to any Person any
proprietary information, trade secrets, technical data or know-how of
any kind pertaining, directly or indirectly, to the Business;
(vi) solicit or hire, or assist in the hiring of, or otherwise engage
or assist in engaging any employee of Mercer or its Affiliates; or
(vii) engage in any practice the purpose of which is to evade the
provisions of this Section 6.5.
(b) It is the intent of the parties to this Agreement that the provisions
of this Section 6.5 shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. If any particular provisions or portions of this
Section 6.5 shall be adjudicated to be invalid or unenforceable,
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such provisions or portion thereof shall be deemed amended to the minimum
extent necessary to render such provision or portion valid and enforceable,
such amendment to apply only with respect to the operation of such
provisions or portions in the particular jurisdiction in which such
adjudication is made.
(c) The parties acknowledge that damages and remedies at law for any
breach of this Section 6.5 may be inadequate and that Mercer shall be
entitled to specific performance and other equitable remedies (including an
injunction) and such other relief as a court or tribunal may deem
appropriate in addition to any other remedies Mercer may have.
6.6 Assignment of Name. At the Closing, CDI will deliver to Mercer a written
assignment, in the form of Exhibit G hereto (the "Name Assignment"), evidencing
their assignment to Mercer or to any Affiliate of Mercer, or any successor or
assign thereof, of all of CDI's rights to the name "Corporate Decisions, Inc."
together with any trademarks, logos or any variants thereof, and such other
names and marks relating to the operation of the Business or the Assets as are
designated in Schedule 6.6 to the Disclosure Schedule (the "CDI Names"). CDI
agrees that from and after the Closing Date, neither CDI nor any of its
Affiliates will use or have the right to use the CDI Names in the operation of
any business in any geographic area. At or following the Closing, CDI will
execute such consents and waivers as may be necessary or appropriate in order
that Mercer may qualify to do business in any state using the CDI Names. At the
Closing, CDI shall amend its articles of organization to change its name to a
name which does not include the name "Corporate Decisions, Inc."
6.7 Information for Registration Statement. CDI shall furnish to Mercer and
Marsh & McLennan all information concerning CDI required for inclusion in the
Registration Statement.
6.8 Resale Restrictions. CDI and each Shareholder hereby agrees to be bound by
the resale restrictions applicable to the shares of MMC Stock under the
Registration Rights Agreement, as provided therein. CDI and each Shareholder
acknowledges that the certificates representing the shares of MMC Stock shall
bear a legend reflecting such restrictions, as well as any restrictions imposed
under the 1933 Act, and all in accordance with the Registration Rights
Agreement.
6.9 Dissolution of CDSNC. CDI shall use commercially reasonable efforts to
complete the final liquidation and dissolution of CDSNC as soon as practicable
and shall furnish to Mercer written evidence of such dissolution promptly
following completion thereof. In connection with such final liquidation and
dissolution CDI shall not permit CDSNC to sell, assign, transfer or otherwise
dispose of any of its material assets or rights, tangible or intangible, to any
third party.
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Article VII
COVENANTS OF MERCER
Mercer hereby covenants and agrees with CDI as follows:
7.1 Cooperation. Mercer shall use commercially reasonable efforts, and
shall cooperate with CDI to secure all material consents, approvals,
authorizations, exemptions and waivers from third parties as shall be
required in order to enable Mercer to effect the transactions contemplated on
its part hereby, and Mercer shall otherwise use commercially reasonable
efforts to cause the consummation of such transactions in accordance with the
terms and conditions hereof. Prior to the Closing Date, Mercer further agrees
to deliver to CDI prompt written notice of any event or condition to Mercer's
Knowledge, which, if it existed on the date of this Agreement, would result
in any of the representations and warranties of Mercer contained herein being
untrue in any material respect. Prior to the Closing Date, Mercer agrees to
deliver to CDI prompt written notice of any event or condition to Mercer's
Knowledge which, if it existed on the date of this Agreement, would result in
any of the representations and warranties of CDI or the Shareholders
contained herein being untrue in any material respect (other than any such
event or condition that is disclosed by CDI or the Shareholders on the
Disclosure Schedule or any certificate delivered pursuant to this Agreement).
7.2 MMC Stock. Mercer shall cause Marsh & McLennan to issue such number of
whole shares of MMC Stock as may be required by Article III hereof.
7.3 Registration Rights. Mercer shall cause Marsh & McLennan to execute and
deliver to CDI and the Shareholders, the Registration Rights Agreement in the
form of Exhibit H (the "Registration Rights Agreement") providing for
registration under the 1933 Act of all MMC Stock payable to CDI or the
Shareholders on the Closing Date under Section 3.2 of this Agreement, all as
provided in such agreement.
7.4 Insurance. For a period ending on the third anniversary of the Closing
Date, Mercer shall maintain, at no expense to CDI, professional liability
insurance coverage in the amount of $2,500,000 per claim and aggregate with
respect to claims made after the Closing Date which arise from acts, errors
or omissions committed by CDI or its employees prior to the Closing Date. To
the extent that such claims exceed the aggregate amount of such coverage,
Mercer shall have no liability for such excess claims.
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Article VIII
CONDITIONS TO MERCER'S OBLIGATIONS
The obligations of Mercer under this Agreement to purchase the Assets and to
consummate the other transactions contemplated hereby shall be subject to the
satisfaction (or waiver by Mercer) on or prior to the Closing Date of all of
the following conditions:
8.1 Representations and Warranties. The representations and warranties of
CDI and the Shareholders contained in this Agreement, the Disclosure
Schedule, the Ancillary Agreements or in any Schedule, Exhibit or certificate
delivered pursuant hereto or thereto, taken as a whole, shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as
of the Closing Date, except for (i) changes specifically contemplated by this
Agreement and (ii) those representations and warranties which address matters
only as of a particular date (which shall have been true and correct as of
such date) and CDI and the Shareholders shall have delivered to Mercer a
certificate, dated the Closing Date, signed by an appropriate officer of CDI
and each of the Shareholders, to such effect.
8.2 Injunction. No action or proceeding shall have been commenced or
threatened before a court or other governmental body or by any public
authority to restrain or prohibit any of the transactions contemplated hereby
or seeking damages in connection therewith, and CDI shall have delivered to
Mercer a certificate, dated the Closing Date, signed by an appropriate
officer of CDI, to such effect.
8.3 Governmental Approvals. All material governmental filings, notices,
authorizations, consents and approvals necessary to permit the consummation
of the transactions contemplated by this Agreement shall have been made or
received, as the case may be.
8.4 Consents; Permits. Each of the third party consents listed in Schedule
4.2.2 to the Disclosure Schedule shall have been received except where the
failure to obtain such consents would not have a Material Adverse Effect.
8.5 Performance of Agreements. Each and all of the agreements and covenants
of CDI to be performed on or before the Closing Date pursuant to the terms
hereof shall have been duly performed in all material respects, and CDI shall
have delivered to Mercer a certificate, dated the Closing Date, signed by an
appropriate officer of CDI, to such effect.
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8.6 Transfer Documents. CDI shall have delivered to Mercer all documents,
including the Asset Transfer Documents, necessary to vest in Mercer good
title to the Assets free and clear of all Encumbrances except Encumbrances
which do not, individually or in the aggregate, materially detract from the
value of the Assets or impair the use of the Assets by Mercer in the
operation of the Business, each in form reasonably satisfactory to Mercer.
8.7 No Material Adverse Effect. Prior to the Closing Date, there shall have
been no change which would have a Material Adverse Effect, and CDI shall have
delivered to Mercer a certificate, dated the Closing Date, signed by an
appropriate officer of CDI to such effect.
8.8 Escrow Agreement. CDI shall have executed and delivered the Escrow
Agreement.
8.9 Registration Rights Agreement. CDI shall have executed and delivered
the Registration Rights Agreement.
8.10 Employment Agreements. Each of the employment agreements, special
payment agreements, confidentiality agreements and non-solicitation
agreements referred to in Section 10.6(a) shall have been executed and
delivered by the employee who is a party thereto.
8.11 CDI Organization and Good Standing.
(a) Organizational Documents. Mercer shall have received a
copy of (i) the Articles of Organization, as amended, of CDI,
certified by the Massachusetts Secretary of State, as of a
date not earlier than 20 Business Days prior to the Closing
Date and accompanied by a certificate of the Clerk or
Assistant Clerk of CDI, dated as of the Closing Date, stating
that no amendments have been made to such Articles of
Organization since such date, and (ii) the Bylaws of CDI,
certified by the Clerk or Assistant Clerk of CDI.
(b) Good Standing. Mercer shall have received a good
standing certificate for CDI from the Massachusetts Secretary
of State, dated as of a date not earlier than 20 Business Days
prior to the Closing Date.
8.12 Resolutions of CDI. Mercer shall have received a true and complete
copy, certified by the Clerk or Assistant Clerk of CDI, of the resolutions
duly and validly adopted by the Board of Directors and Shareholders of CDI
evidencing their authorization of the execution and delivery of this
Agreement and the Ancillary Agreements and the transactions contemplated
hereby and thereby.
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8.13 Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to Mercer and
its counsel, and Mercer shall have received copies of all such documents and
other evidence as it or its counsel may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
8.14 Employees. The Employees referred to in Section 10.6(b) shall have
accepted the offers of employment with Mercer referred to in Section 10.6(b)
other than Employees whose failure to accept employment with Mercer in the
aggregate cannot reasonably be expected to have a Material Adverse Effect.
8.15 Opinion of Counsel for CDI and the Shareholders. Mercer shall have
received an opinion of Ropes & Gray, counsel for CDI and the Shareholders,
dated the Closing Date, to the effect and in the form set forth in Exhibit I.
8.16 Name Assignment. CDI shall have executed and delivered the Name
Assignment.
8.17 Sublease. CDI shall have executed and delivered the sublease
substantially in the form of Exhibit J hereto (the "Sublease") for the
sublease by Mercer of CDI's offices at One International Place, Boston,
Massachusetts.
Article IX
CONDITIONS TO CDI'S OBLIGATIONS
The obligations of CDI under this Agreement to sell the Assets and to
consummate the other transactions contemplated hereby shall be subject to the
satisfaction (or waiver by CDI) on or prior to the Closing Date of all of the
following conditions:
9.1 Representations and Warranties. The representations and warranties of
Mercer contained in this Agreement, the Ancillary Agreements or in any
Schedule, Exhibit or certificate delivered pursuant hereto or thereto, taken
as a whole, shall be true and correct in all material respects on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date, and Mercer shall have
delivered to CDI an
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officer's certificate, dated the Closing Date, to such effect.
9.2 Injunction. No action or proceeding shall have been commenced or
threatened before a court or other governmental body or by any public
authority to restrain or prohibit any of the transactions contemplated hereby
or seeking damages in connection therewith, and Mercer shall have delivered
to CDI an officer's certificate, dated the Closing Date, signed by an
appropriate officer of Mercer, to such effect.
9.3 Governmental Approvals. All material governmental filings, notices,
authorizations, consents and approvals necessary to permit the consummation
of the transactions contemplated by this Agreement shall have been made or
received, as the case may be.
9.4 Consents. All consents and approvals of any person, if any, to be
obtained by Mercer which are necessary for the consummation of the
transactions contemplated shall have been obtained.
9.5 Performance of Agreements. Each and all of the agreements and covenants
of Mercer to be performed on or before the Closing Date pursuant to the terms
hereof shall have been duly performed in all material respects, and Mercer
shall have delivered to CDI an officer's certificate, dated the Closing Date,
signed by an appropriate officer of Mercer, to such effect.
9.6 Escrow Agreement. Mercer shall have executed and delivered the Escrow
Agreement.
9.7 Registration Rights Agreement. Marsh & McLennan shall have executed and
delivered the Registration Rights Agreement.
9.8 Employment Agreements and Offers. Mercer shall have executed and
delivered each of the employment agreements referred to in Section 10.6(a),
and Mercer shall have made and not withdrawn the offers of employment
referred to in Section 10.6(b).
9.9 Resolutions of Mercer and Marsh & McLennan. CDI shall have received a
true and complete copy, certified by the Secretary or Assistant Secretary of
Mercer, of the resolutions duly and validly adopted by the Board of Directors
of Mercer evidencing its authorization of the execution and delivery of this
Agreement and the Ancillary Agreements and the transactions contemplated
hereby and thereby. CDI shall have received a true and complete copy,
certified by the Secretary or Assistant Secretary of Marsh & McLennan, of the
resolutions duly and validly adopted by the Board of Directors of Marsh &
McLennan evidencing its authorization of the issuance of the MMC Stock.
9.10 Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to CDI and the
Shareholders and their counsel, and CDI and the Shareholders shall have
received copies of all such documents and other evidence as they or their
counsel may
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reasonably request in order to establish the consummation of such
transactions and the taking of all proceedings in connection therewith.
9.11 Opinion of Counsel for Marsh & McLennan . CDI and the Shareholders
shall have received an opinion of Leonard F. DiNapoli, Jr., Vice President
and Associate General Counsel of Marsh & McLennan, dated the Closing Date, to
the effect and in the form set forth in Exhibit K.
9.12 Sublease. Mercer shall have executed and delivered the Sublease.
9.13 No Material Adverse Effect. No action or proceeding shall have been
commenced or threatened before a court or other governmental body or by any
public authority that would have a material adverse effect on the business or
financial condition of Mercer.
Article X
OTHER AGREEMENTS
10.1 Further Assurances. Each party shall, at the request of the other, at
any time and from time to time following the Closing Date, execute and
deliver to the requesting party such further instruments as may be reasonably
necessary or appropriate in order more effectively (i) to assign, transfer
and convey to Mercer, or to perfect or record Mercer's title to or interest
in the Assets, (ii) to evidence and confirm the assumption by Mercer of the
Assumed Liabilities pursuant to this Agreement, or (iii) otherwise to confirm
or carry out the provisions of this Agreement.
10.2 Books, Records and Information.
(a) Mercer agrees that all records, documents and other
tangible items of information, including the Books and
Records, delivered by CDI pursuant to this Agreement and
retained by Mercer shall be open for inspection by
representatives of CDI and the Shareholders at any time
upon reasonable notice during regular business hours for
a period of six years following the Closing Date and that
CDI and the Shareholders may during such period make such
copies thereof as they may reasonably request, all at
CDI's and the Shareholders' cost and expense. CDI and
the Shareholders agree that all records, documents and
other tangible items of information that are retained by
CDI and the Shareholders and that are related to the
Assets or the Business shall be open for inspection by
representatives of Mercer at any time upon reasonable
notice during regular business hours for a period of six
years following the Closing Date and that Mercer may
during such
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period make such copies thereof as it may reasonably
request, all at Mercer's cost and expense.
(b) CDI shall (i) provide Mercer with such assistance as
may reasonably be requested by it in connection with
Mercer's preparation of any Return, audit or other
examination by any taxing authority or judicial or
administrative proceedings relating to liability for
Taxes, (ii) retain (within the period described in the
following sentence) and provide Mercer with any records
or other information which may be relevant to such
Return, audit or examination, proceeding or
determination, and (iii) provide Mercer with a copy of
any final determination of any audit or examination,
proceeding or determination with respect to Taxes
attributable to CDI, the Business or the Assets that
could affect any amount reportable on any Return required
to be filed by Mercer after the Closing Date or any Taxes
payable by Mercer following the Closing Date. Without
limiting the generality of the foregoing, CDI shall
retain, for a period of six years following the Closing
Date, copies of all Returns, supporting work schedules
and other records or information which are relevant to
such returns for all tax periods or portions thereof
ending before or including the Closing Date. Upon
request, Mercer shall reimburse CDI for any reasonable
out-of-pocket costs and expenses (including, without
limitation, reasonable accounting and legal fees)
incurred by CDI in providing assistance and information
to Mercer pursuant to this Section 10.2(b).
10.3 Mail. After the Closing Date, Mercer shall promptly forward to CDI all
mail and other communications addressed to CDI or its Affiliates and received
by Mercer that do not relate to the Assets or the Business. CDI shall
promptly forward to Mercer all correspondence, documents and other
communications (or any applicable portion thereof) received by it after the
Closing Date that relate to the Assets or to the Business.
10.4 Payments. CDI agrees to deliver to Mercer, and Mercer agrees to deliver
to CDI promptly after receipt thereof, any cash, checks or other instruments
of payment representing the collection of work in progress or accounts
receivable to which the other is entitled (i.e., amounts received in respect
of receivables generated by the Business prior to the Closing Date and not
included in the Assets shall be delivered to CDI, and amounts received in
respect of receivables generated by the Business on and after the Closing
Date shall be delivered to Mercer). Any amounts collected shall be applied
to the specified invoice of a particular customer. If CDI shall determine to
undertake any collection action (e.g., legal action or referral to a
collection agency) with respect to any account receivable, it shall do so at
its own expense and only after consulting with Mercer. If any obligor on an
account receivable of the Business shall set off against any payment on such
account receivable (the "Impaired Receivable") made to the
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party which owns the Impaired Receivable (the "Impaired Party") an amount
that such obligor claims is owed to it by the other party hereto (the
"Reimbursing Party"), then, promptly after receipt of such documentation as
the Reimbursing Party shall reasonably request, the Reimbursing Party shall
pay to the Impaired Party an amount equal to the amount of such set-off. In
such event, the Reimbursing Party shall be subrogated to the rights of the
Impaired Party with respect to that portion of the Impaired Receivable which
was set off against by the obligor.
10.5 Taxes.
(a) Notwithstanding anything to the contrary contained
herein, (i) CDI and the Shareholders shall be liable for, and
shall pay, indemnify and hold harmless Mercer and its
Affiliates from and against any liability for Taxes that
either (A) are imposed on CDI or the Shareholders which are
attributable to any taxable period or portion thereof on or
prior to the Closing or (B) otherwise result from the
ownership, possession, use or operation of the Assets or the
Business on or prior to the Closing, and (ii) Mercer shall
pay, indemnify and hold harmless CDI and the Shareholders from
and against any liability for Taxes that either (A) are
imposed on Mercer or any Affiliate of Mercer (other than any
Taxes of CDI or the Shareholders or, with respect to any
taxable period or portion thereof on or prior to the Closing,
Taxes that are attributable to the Business or the Assets, in
either event that are imposed on Mercer as result of the
consummation of the transactions contemplated by this
Agreement) or (B) otherwise result from Mercer's ownership,
possession, use or operation of the Assets or the Business
after the Closing. Real property, personal property and ad
valorem taxes or other similar taxes or assessments levied or
assessed on or with respect to the Assets for the tax year
which includes the Closing Date, shall be prorated among CDI
and Mercer on a per diem basis based upon their respective
period of ownership during such year, CDI being allocated any
such taxes or assessments apportioned to but excluding the
Closing Date. CDI shall not enter into any settlement or
agreement in compromise of any claim relating to Taxes with
any government or taxing authority which purports to bind
Mercer with respect to any tax period ending after the Closing
Date without Mercer's consent, which consent shall not be
unreasonably withheld. No new elections with respect to Taxes,
or any changes in current elections with respect to Taxes,
affecting the Assets or the Business shall be made by CDI
after the date of this Agreement without the prior written
consent of Mercer, which consent shall not be unreasonably
withheld.
(b) In the event any taxing authority shall assess any sales,
goods and services or other similar Taxes against CDI in
connection with the conduct of the Business on or prior to the
Closing, CDI and the Shareholders shall
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have no recourse against, and CDI and the Shareholders shall
not seek reimbursement from, the customers of the Business
with respect to which such Taxes shall have been assessed;
provided that if the aggregate amount of such Taxes exceeds
$75,000, then, after first consulting with Mercer, CDI and the
Shareholders may have recourse against, and may seek
reimbursement from, such customers of the Business, but only
with respect to the amount of such Taxes in excess of $75,000.
(c) Mercer shall pay and be responsible for all applicable
sales, transfer, documentary, use, filing and other similar
taxes and fees that may be levied by any taxing jurisdictions
that are directly attributable to the sale, conveyance,
assignment, transfer or delivery of the Assets.
(d) Each party to this Agreement shall not knowingly take any
independent and affirmative action which would cause another
party to this Agreement to incur a liability under this
Section 10.5.
10.6 Employees.
(a) At the Closing, Mercer or one of its Affiliates shall
enter into (i) employment agreements, substantially in the
form previously provided to CDI, with the Employees listed on
Schedule 10.6(a)(i) to the Disclosure Schedule; and (ii)
agreements, substantially in the form previously provided to
CDI, with the Employees listed on Schedule 10.6(a)(ii) to the
Disclosure Schedule, which provide for special payments to
such Employees on the terms and conditions set forth therein.
In addition, the Employees listed on Schedules 10.6(a)(i) and
10.6(a)(ii) to the Disclosure Schedule shall enter into
confidentiality agreements and non-solicitation agreements
with Mercer or one of its Affiliates, substantially in the
form previously provided to CDI.
(b) As of the Closing Date, Mercer or one of its Affiliates
will offer to employ on an "at will" basis any and all of the
Employees listed on Schedule 10.6(b) to the Disclosure
Schedule, other than (i) any such Employees who have not
authorized CDI to provide such Employees' personnel records to
Mercer, and (ii) any other Employees agreed to by Mercer and
CDI in writing. CDI shall use its commercially reasonable
efforts to support and encourage all such Employees offered
employment to accept such offers as of the Closing Date.
Prior to the extension of such offers, Mercer and CDI shall
coordinate and mutually agree upon the job levels (titles and
duties), salaries and incentive expectations of such
Employees. Mercer shall have no obligation or liability of any
nature with respect to any Employee who does not accept an
offer of
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employment from Mercer on or prior to the Closing Date, and
CDI shall be liable for, and shall indemnify and hold Mercer
or any Affiliate extending an offer of employment to any such
Employee harmless from and against, any liabilities or
obligations relating to such Employees who do not accept such
offers of employment. It is Mercer's current intention to
retain those Employees hired by Mercer pursuant to this
Section 10.6(b).
(c) Each Employee entering into an employment agreement with
or accepting an offer of employment from Mercer (a
"Transferring Employee") shall be entitled to receive, as of
the later of the Closing Date and such Employee's date of
commencement of employment at Mercer (the "Employee Hire
Date"), all of the benefits provided under the standard
benefit plans of Marsh & McLennan, subject to the terms and
conditions of such benefit plans, that are available to
employees of Mercer or such Affiliate of a similar job
classification, title or pay grade. Each Transferring
Employee employed in the United States shall be eligible as of
his or her date of employment to receive medical benefits
under the medical plans of Marsh & McLennan, and Mercer shall
use reasonable efforts to ensure that such medical plans do
not exclude preexisting medical conditions or impose any
waiting periods for coverage. For purposes of calculating
service dates with respect to eligibility for the company
match in the Marsh & McLennan Companies Stock Investment Plan
and participation in the Stock Purchase Plan, and with respect
to vacation, sick leave, severance policy, insurance and all
other employee benefits offered by Marsh & McLennan to
Mercer's employees (other than the Marsh & McLennan Companies
Retirement Plan which is discussed below), the length of
service of each Transferring Employee employed in the United
States shall be counted as if such Transferring Employee had
been an employee of Mercer or such Affiliate since such
Transferring Employee's most recent date of hire by CDI. With
respect to the Marsh & McLennan Companies Retirement Plan, the
vesting service date and benefit service date for each
Transferring Employee employed in the United States will be
such Transferring Employee's most recent date of hire by CDI,
and such Transferring Employee's monthly base pay with CDI
since such date will, to the extent applicable, be used to
determine such Transferring Employee's benefits under such
plan.
(d) Mercer shall provide, subject to its vacation policy,
each Transferring Employee with the number of days of accrued
but unused vacation time set forth next to such Transferring
Employee's name on Schedule 10.6(d) to the Disclosure Schedule.
(e) Notwithstanding any other provision of this Agreement,
CDI shall be liable for, and shall indemnify and hold Mercer
or any Affiliate employing the Transferring Employees harmless
from and against, any liabilities or obligations relating to
the Transferring Employees (or their dependents), including
reasonable attorneys' fees and disbursements, resulting from
(i)
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any and all claims for life insurance, disability and medical
benefits based on occurrences prior to the later of Closing
Date or the Employee Hire Date (including claims for
continuing treatment with respect to any accident or illness
for which coverage was so provided), whether such claims are
asserted before, on or after the Closing Date or the Employee
Hire Date (as the case may be), (ii) any and all other welfare
and fringe benefit claims based on occurrences on or prior to
the later of Closing Date or the Employee Hire Date, whether
such claims are asserted before, on or after the Closing Date
or the Employee Hire Date (as the case may be), (iii) any and
all life insurance, disability, severance (including severance
claims based upon the transactions contemplated hereunder),
medical or other welfare and fringe benefits claims of any
individual (or his or her covered dependents) who retired from
CDI, or died, on or prior to the later of the Closing Date or
the Employee Hire Date, whether such claim is asserted before,
on or after the Closing Date or the Employee Hire Date (as the
case may be), (iv) any and all claims (including third party
claims) under or with respect to any pension or retirement
plan of deferred compensation of CDI, (v) any and all claims
of Transferring Employees with respect to incentive
compensation accrued as of the later of the Closing Date or
the Employee Hire Date, whether such claims are asserted
before, on or after the Closing Date or the Employee Hire Date
(as the case may be), other than the liabilities and
obligations assumed by Mercer pursuant to Section 2.4(b) and
set forth in Schedule 2.4(b) to the Disclosure Schedule, (vi)
any and all claims related to any severance or other
termination benefits provided for by federal or state statute
or otherwise (including, without limitation, claims arising
under the Worker Adjustment and Retraining Notification Act)
and arising out of a claim of actual or constructive
termination resulting from the consummation of the
transactions contemplated hereunder, (vii) any and all claims
related to any compensation arrangement sponsored by CDI and
payable as a result of the execution or performance of this
Agreement, or on the termination of any Transferring Employee
after the Closing in connection therewith, (viii) any and all
other claims for severance relating to the employment of the
Transferring Employees by CDI, and (ix) any and all claims of
Transferring Employees with respect to accrued but unused
vacation time as of the later of the Closing Date or the
Employee Hire Date, whether such claims are asserted before,
on or after the Closing Date or the Employee Hire Date (as the
case may be), other than the liabilities and obligations of
Mercer pursuant to Section 10.6(d).
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10.7 Employment Taxes and Reporting.
(a) CDI and Mercer agree that, for purposes of taxes imposed
under the United States Federal Income Contribution Act and
the United States Federal Unemployment Tax Act, Mercer shall
be treated as a "successor employer" and CDI as a
"predecessor," within the meaning of section 3306(b)(1) of the
Code, with respect to Transferring Employees. CDI and Mercer
agree that the Federal income and employment tax reporting
obligations with respect to wages paid for calendar year 1997
will be satisfied in accordance with the standard procedure
set forth in Rev. Proc. 96-60.
(b) CDI and Mercer agree that for purposes of taxes imposed
under the Massachusetts unemployment tax provisions, Mercer
shall be treated as a successor-in-interest and CDI as a
predecessor-in-interest. CDI shall fully comply with the
requirements of Massachusetts General Law Ch. 151A, Section
14(n)(1), so as to provide Mercer with status as
successor-in-interest and enable the transfer of experience
record, reserve account balance and wage base and other such
required information to Mercer as successor-in-interest. Upon
written request, CDI shall join with Mercer, in the timely
filing of all required applications and related documents for
the transfer of the experience record, the reserve account
balance, and the wage bases for state unemployment tax
purposes ("Application"). Mercer will prepare such
Applications based on the information necessary to effectuate
the filing that shall be provided, to the extent necessary, by
CDI.
10.8 CDI's Offices. CDI shall use its reasonable efforts to negotiate an
early termination of the Lease which shall not occur earlier than the date on
which Mercer relocates its staff from CDI's offices at One International
Place, Boston, Massachusetts to Mercer's offices at 33 Hayden Avenue,
Lexington, Massachusetts. CDI and Mercer shall cooperate with each other to
coordinate the timing of any early termination of the lease and Mercer's
relocation of its staff. Any benefit received by CDI in connection with an
early termination of the Lease shall be paid by CDI to Mercer promptly after
CDI's receipt thereof
Article XI
TERMINATION PRIOR TO CLOSING
11.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by the mutual written consent of Mercer and CDI;
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(b) by either Mercer or CDI by written notice to the other
party without liability on the part of the terminating party
on account of such termination (provided the terminating party
or parties is not otherwise in default or in breach of this
Agreement), if the Closing Date shall not have occurred on or
before December 31, 1997.
(c) by either Mercer or CDI, in writing, without
liability on the part of the terminating party on account of
such termination (provided the terminating party is not
otherwise in default or breach of this Agreement), if the
other party (which, in the case of CDI, shall include the
Shareholders) shall (i) fail to perform in any material
respect any covenant or agreement contained herein required to
be performed by such party or parties prior to the Closing
Date, or (ii) have breached any of the representations or
warranties of such party or parties contained herein in any
material respect and such breach has a Material Adverse
Effect; provided, however, that no such termination shall
become effective unless the terminating party has notified the
other party in writing of its or their intent to terminate,
such notice to be sent at least ten days prior to the intended
date of termination and specifying the nature of the failure
or breach giving rise to such termination; and provided,
further, that such notice to terminate shall be void if the
recipient thereof has cured such failure or breach on or
before the expiration of such ten-day period.
11.2 Effect on Obligations. Termination of this Agreement pursuant to this
Article XI shall terminate all obligations of the parties hereunder, except
for the obligations under Sections 13.8 and 13.11 hereof and the obligations
set forth in the next succeeding sentence of this Section 11.2. Upon any
termination of this Agreement each party hereto will redeliver all documents,
workpapers and other material of any other party relating to the transactions
contemplated hereby, and all copies of such materials, whether so obtained
before or after the execution hereof, to the party originally furnishing the
same.
Article XII
SURVIVAL AND INDEMNIFICATION
12.1 Survival of Representations, Warranties and Covenants. The respective
representations and warranties of CDI, the Shareholders and Mercer contained
in this Agreement, the Disclosure Schedule, any of the Ancillary Agreements,
or in any Exhibit, Schedule, agreement or other document delivered in
connection with the Closing pursuant hereto or thereto shall survive the
Closing Date, but shall expire on June 1, 1999 except that any of such
representations and warranties shall survive with respect to, and to the
extent, and for the duration of the pendency, of any claim for which a
Certificate has been delivered to the
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Indemnifying Party prior to such expiration. The respective covenants and
agreements of CDI, the Shareholders and Mercer as of the Closing Date
contained in this Agreement, any of the Ancillary Agreements or in any
Exhibit, Schedule, agreement or other document delivered in connection with
the Closing pursuant hereto or thereto (including, without limitation, the
respective indemnification obligations of CDI, the Shareholders and Mercer
set forth in Sections 12.2(a) and (b) hereof) shall survive the consummation
of the transactions contemplated by this Agreement.
12.2 Indemnification.
(a) Subject to Section 12.4 hereof, CDI and each of the
Shareholders, jointly and severally, shall indemnify, and hold
harmless Mercer and its Affiliates, from and against, and pay
or reimburse Mercer and its Affiliates for, any and all costs,
losses, damages or liabilities (including, without limitation,
reasonable attorneys' fees, interest and any penalties, but in
each case net of Tax benefits if and when actually realized by
the Indemnified Party (collectively, "Losses" and
individually, a "Loss"), whether or not resulting from any
third party claims, to the extent directly incurred or
suffered by Mercer or any of its Affiliates with respect to or
in connection with:
(i) (A) the failure of any representation or warranty of CDI
or the Shareholders made in or pursuant to this Agreement, the
Disclosure Schedule, the Ancillary Agreements or in the
Schedules or Exhibits attached hereto or thereto, or in any
certificates delivered in connection with the Closing pursuant
hereto or thereto by CDI or the Shareholders, taken as a
whole, to be true and correct as of the Closing Date, or (B)
any breach or nonfulfillment of any covenant or obligation of
CDI or the Shareholders under this Agreement or the Ancillary
Agreements or under any other agreements, certificates or
documents delivered in connection with the Closing pursuant
hereto or thereto by CDI or the Shareholders, other than any
Loss which is asserted as a claim under subparagraph (ii) of
this Section 12.2(a); or
(ii) any claim which may be made against Mercer or any
of its Affiliates with respect to any Excluded Assets or
Excluded Liabilities, and any suits, actions, proceedings and
assessments against Mercer or any of its Affiliates and
reasonable costs and expenses incurred by Mercer or any of its
Affiliates in the defense thereof, including reasonable
attorneys' fees, incident to the matters referred to in this
subparagraph (ii).
(b) Mercer shall indemnify and hold harmless CDI and the
Shareholders, from and against, and pay and reimburse CDI and
the Shareholders for,
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any and all Losses, whether or not resulting from any third
party claim, to the extent directly incurred or suffered by
CDI or any of the Shareholders with respect to or in
connection with:
(i) (A) the failure of any representation or warranty of
Mercer made in or pursuant to this Agreement, the Ancillary
Agreements or in the Schedules or Exhibits attached hereto or
thereto, or in any certificates delivered in connection with
the Closing pursuant hereto or thereto by Mercer, taken as a
whole, to be true and correct as of the date of this Agreement
and as of the Closing Date or (B) any breach or nonfulfillment
of any covenant or obligation of Mercer under this Agreement
or the Ancillary Agreements or under any other agreements,
certificates or documents delivered in connection with the
Closing pursuant hereto or thereto by Mercer, other than any
Loss which is asserted as a claim under subparagraph (ii) of
this Section 12.2(b); or
(ii) any claim which may be made against CDI or the
Shareholders with respect to the Assumed Liabilities and any
suits, actions, proceedings and assessments against CDI or the
Shareholders and reasonable costs and expenses incurred by CDI
or any of the Shareholders in the defense thereof, including
reasonable attorneys' fees, incident to the matters referred
to in this subparagraph (ii).
12.3 Indemnification Procedure.
(a) Promptly after the party or parties seeking
indemnification (the "Indemnified Party") learns of any event
or circumstance, including, without limitation, any claim by a
third party described in Section 12.3(c) hereof, that, in the
judgment of the Indemnified Party, may give rise to
indemnification hereunder, the Indemnified Party shall deliver
to the party or parties from which indemnification is sought
(the "Indemnifying Party") a certificate (the "Certificate"),
which Certificate shall:
(i) state that the Indemnified Party has incurred or properly
accrued Losses, or anticipates that it will incur Losses for
which such Indemnified Party is entitled to indemnification
pursuant to this Agreement; and
(ii) specify in reasonable detail each individual item of Loss
included in the amount so stated, the date such item was
incurred or properly accrued, the basis for any anticipated
Loss or Losses and the nature of the misrepresentation, breach
of warranty or breach of covenant or claim to which each such
item is related and the computation of the
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amount to which such Indemnified Party claims to be entitled
hereunder;
provided, however, that any failure or delay by the
Indemnified Party in delivering a Certificate to the
Indemnifying Party shall not affect the Indemnified Party's
right to indemnification under this Article XII, except to the
extent that the Indemnifying Party is able to establish its
damages resulting directly from such failure or delay.
(b) In case the Indemnifying Party shall object to the
indemnification of an Indemnified Party in respect of any
claim or in any Certificate, the Indemnifying Party shall,
within ten Business Days after receipt by the Indemnifying
Party of such Certificate, deliver to the Indemnified Party a
written notice to such effect and the Indemnifying Party and
the Indemnified Party shall, within the thirty-day period
beginning on the date of receipt by the Indemnified Party of
such written objection, attempt in good faith to agree upon
the rights of the respective parties with respect to each of
such claims to which the Indemnifying Party shall have so
objected. If the Indemnified Party and the Indemnifying Party
shall succeed in reaching agreement on their respective rights
with respect to any of such claims, the Indemnified Party and
the Indemnifying Party shall promptly prepare and sign a
memorandum setting forth such agreement. Should the
Indemnified Party and the Indemnifying Party be unable to
agree as to any particular item or items or amount or amounts,
then the Indemnified Party and the Indemnifying Party shall
submit such dispute to a court of competent jurisdiction.
(c) Promptly after the assertion by any third party of any
claim against any Indemnified Party that, in the judgment of
such Indemnified Party, may result in the incurrence by such
Indemnified Party of Losses for which such Indemnified Party
would be entitled to indemnification pursuant to this
Agreement, such Indemnified Party shall deliver in accordance
with paragraph (a) of this Section 12.3 to the Indemnifying
Party a Certificate which shall include in reasonable detail a
description of such claim and such Indemnifying Party may, at
its option, assume the defense of the Indemnified Party
against such claim (including the employment of counsel, who
shall be reasonably satisfactory to such Indemnified Party,
and the payment of expenses). Until the Indemnifying Party
shall have so assumed the defense of the Indemnified Party
against such claim following the delivery of such Certificate,
the Indemnified Party may, but shall not be obligated to,
undertake the defense of such claim on behalf of and for the
account and risk of the Indemnifying Party, and if such
Indemnified Party is entitled to indemnification under this
Article XII, all legal or other expenses reasonably incurred
by the Indemnified Party shall be borne by the Indemnifying
Party. Any
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Indemnified Party shall have the right to employ separate
counsel in any such action or claim and to participate in the
defense thereof, provided that the fees and expenses of such
counsel shall be at the expense of the Indemnifying Party only
if (i) the Indemnifying Party shall have failed, within ten
Business Days after receipt of a Certificate in respect of
such claim, to assume the defense of such claim or to notify
the Indemnified Party in writing that it will assume the
defense of such claim, (ii) the employment of such counsel has
been specifically authorized in writing by the Indemnifying
Party, or (iii) the named parties to any such action
(including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party and such
Indemnified Party shall have been advised in writing by such
counsel that there may be one or more legal defenses available
to either party and that the assertion (or nonassertion) by
the Indemnifying Party of any of such defenses will be adverse
to the interests of the Indemnified Party. No Indemnifying
Party shall be liable to indemnify any Indemnified Party for
any compromise or settlement of any such action or claim
effected without the consent of the Indemnifying Party, but if
settled with the consent of the Indemnifying Party, or if
there be final judgment for the plaintiff in any such action,
the Indemnifying Party shall indemnify and hold harmless each
Indemnified Party from and against any Loss or Losses by
reason of such settlement or judgment. After any such claim
has been filed or initiated, each party shall make available
to the other and its attorneys and accountants all pertinent
information under its control relating to such claim which is
not confidential or proprietary in nature or which is made
available under the terms of a confidentiality agreement or is
delivered or obtained under appropriate protective orders
satisfactory to such party and the parties agree to render to
each other such assistance as they may reasonably require of
each other in order to facilitate the proper and adequate
defense of any such claim.
(d) Except to the extent that Mercer shall have exercised its
right under Section 12.3(e) to withhold amounts still payable
to CDI under Section 3.2, within twenty (20) Business Days of
the determination of the amount of any (i) claims for Losses
specified in any Certificate to which an Indemnifying Party
shall not object in writing within ten Business Days of
receipt of such Certificate, (ii) claims for Losses covered by
a memorandum of agreement of the nature described in paragraph
(b) of this Section 12.3, (iii) claims for Losses the validity
and amount of which have been the subject of a final judicial
determination described in such paragraph (b) which is not
appealable or (iv) claims for Losses the validity and amount
of which shall have been the subject of a final judicial
determination described in paragraph (c) which is not
appealable, in each case, the Indemnifying Party shall pay
such determined amount to the Indemnified Party by wire
transfer to the bank account or accounts
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designated in writing by the Indemnified Party, which
designation shall be provided to the Indemnifying Party not
less than one Business Day prior to such payment.
(e) Upon delivery of a Certificate by Mercer to CDI and the
Shareholders, Mercer shall be entitled, at its discretion, to
withhold, up to the amount of the Losses specified in such
Certificate, any amount which then remains payable to CDI
under Section 3.2. In the event that CDI and the Shareholders
shall object to all or any portion of such Losses and it is
determined pursuant to Section 4 of the Escrow Agreement, if
applicable, and this Section 12.3 that Mercer is not entitled
to indemnification in respect of all or any portion of the
amount withheld, then Mercer shall, within five Business Days
of such determination, pay to CDI the unduly withheld amount,
plus interest thereon from the date such amount should have
been paid under Section 3.2 hereof until the date such amount
is paid to CDI at a rate equal to two (2) times the prime rate
as published in The Wall Street Journal on the date such
payment should have been made under Section 3.2.
12.4 Limitation of Liability.
(a) Notwithstanding anything to the contrary herein,
(i) CDI and the Shareholders shall not be liable in respect of any
indemnification obligation arising under Section 12.2(a)(i)(A),
(A) unless and until the aggregate cumulative amount of Losses
claimed thereunder exceeds $250,000 (the "CDI Deductible"), in which
case CDI and the Shareholders shall be liable only for such excess
over the CDI Deductible, and
(B) to the extent any claim or aggregate claims exceed,
(1) for claims under Section 4.2 other than Sections 4.2.8 and
4.2.9, $33,450,000, or
(2) for claims under Section 4.1 and Sections 4.2.8 and 4.2.9
and
(a) for which Certificates are or have been delivered by
Mercer prior to December 1, 1998, $26,450,000, or
(b) for which Certificates are or have been delivered by
Mercer on or after December 1, 1998 and prior to June 1,
1999, $19,450,000,
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provided, however, that Mercer may not in any event recover an
aggregate of more than $33,450,000 under Section 12.2(a)(i)(A),
(ii) no Shareholder shall have any liability under Section
12.2(a)(i)(A) for any representation or warranty made in Section 4.1
or Sections 4.2.8 or 4.2.9, and
(iii) no Shareholder shall have any liability under Section
12.2(a)(i)(A) in excess of the amount allocated to such Shareholder on
Exhibit L hereto.
(b) Notwithstanding anything to the contrary herein, Mercer
shall not be liable in respect of any indemnification
obligation arising under Section 12.2(b)(i)(A), (i) unless and
until the aggregate cumulative amount of Losses claimed
thereunder exceeds $25,000 (the "Mercer Deductible"), in which
case Mercer shall be liable only for such excess over the
Mercer Deductible, and (ii) out of claims which in the
aggregate exceed $33,450,000.
(c) No party shall be liable under this Article 12, and no
claim for indemnification may in any event be asserted under
this Article 12, for any loss of profits or consequential
damages by reason of a breach of any representation, warranty,
covenant or other provision of this Agreement or any of the
Ancillary Agreements, except (i) to the extent loss of profits
or consequential damages are payable in connection with third
party claims which are indemnifiable under this Article 12 or
(ii) loss of profits of Mercer resulting from a breach of any
representation or warranty contained in Section 4.2.5 or 4.2.7.
(d) CDI shall have no liability under any provision of this
Agreement for Losses or the portion of any Loss which results
from actions solely taken or not taken by Mercer or its
Affiliates after the Closing.
12.5 Exclusive Remedy. This Article 12 shall provide the sole and exclusive
remedy for any and all Losses sustained or incurred by an Indemnified Party,
its successors or assigns in connection with this Agreement or the
transactions contemplated hereby.
Article XIII
MISCELLANEOUS
13.1 Entire Agreement. This Agreement (including the Disclosure Schedule,
the Ancillary Agreements and the Exhibits and Schedules hereto and thereto)
sets forth the entire understanding of the parties hereto with respect to the
subject
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matter hereof and thereof. Any other prior agreements or undertakings among
the parties hereto (whether oral or written) regarding the subject matter
hereof are merged into and superseded by this Agreement.
13.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors
of the parties hereto; provided, however, that this Agreement may not be
assigned (by operation of law or otherwise) by the parties hereto without the
prior written consent of the other party hereto, except that Mercer may
assign any or all of its rights and/or obligations hereunder to any of its
direct or indirect Subsidiaries.
13.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
13.4 Headings. The headings of the Articles, Sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
13.5 Modification and Waiver. No amendment, modification or alteration of
the terms or provisions of this Agreement shall be binding unless the same
shall be in writing and duly executed by the parties hereto, except that any
of the terms or provisions of this Agreement may be waived in writing at any
time by the party which is entitled to the benefits of such waived terms or
provisions. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether
or not similar). No delay on the part of any party hereto in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
13.6 No Third Party Beneficiary Rights. This Agreement is not intended to
and shall not be construed to give any Person other than the parties
signatory hereto and Marsh & McLennan any interest or rights (including,
without limitation, any third party beneficiary rights) with respect to or in
connection with any agreement or provision contained herein or contemplated
hereby.
13.7 Bulk Transfer Laws. Mercer hereby waives compliance by CDI with the
provisions of the bulk sales laws of any jurisdiction, and CDI warrants and
agrees to pay and discharge when due all claims of creditors which could be
asserted against Mercer or its Affiliates by reason of such non-compliance to
the extent that such liabilities are not specifically assumed by Mercer
hereunder. CDI shall indemnify and hold Mercer and its Affiliates harmless
from and against (and shall on demand reimburse Mercer for) any Loss directly
suffered or incurred by Mercer or its Affiliates by reason of CDI's failure
to pay and discharge such claims.
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13.8 Expenses. Except as otherwise provided in this Agreement, each of CDI,
the Shareholders and Mercer shall pay all costs and expenses incurred by it
or on its behalf in connection with this Agreement and the transactions
contemplated hereby, including, without limiting the generality of the
foregoing, fees and expenses of its own financial consultants, accountants
and legal counsel.
13.9 Notices. Any notice, request, instruction or other document to be given
hereunder by any party hereto to any other party shall be in writing and
shall be sufficiently given if delivered in person, sent by telecopier, sent
by reputable express overnight courier service or sent by registered or
certified mail, postage prepaid, as follows:
if to Mercer, to:
Mercer Management Consulting, Inc.
1166 Avenue of the Americas, 44th Floor
New York, New York 10036
Telecopy No.: (212) 345-8035
Attention: James A. Quella
with a copy to:
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas, 31st Floor
New York, New York 10036
Telecopy No.: (212) 345-5627
Attention: Leonard F. DiNapoli, Jr.
if to CDI or the Shareholders, to:
Corporate Decisions, Inc.
One International Place
100 Oliver Street
Boston, Massachusetts 02110
Telecopy No.: (617) 330-6898
Attention: David J. Morrison
with a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Telecopy No.: (617) 951-7050
Attention: Thomas B. Draper
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or at such other address for a party as shall be specified by like notice.
Any notice which is delivered personally in the manner provided herein shall
be deemed to have been duly given to the party to whom it is directed upon
actual receipt by such party (or its agent for notices hereunder). Any
notice which is addressed and mailed in the manner herein provided shall be
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the fifth day after the
day it is so placed in the mail. Any notice which is telecopied in the
manner provided herein shall be presumed to have been duly given to the party
to whom it is directed upon telephonic confirmation of receipt of such
telecopy. Any notice which is sent by reputable express overnight courier
service in the manner provided herein shall be presumed to have been duly
given to the party to which it is addressed at the close of business on the
next day after the day it is deposited with such courier service.
13.10 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York.
13.11 Publicity. Except as otherwise required by applicable laws or
regulations, CDI and Mercer shall not issue any press release or make any
other public statement, in each case relating to or connected with or arising
out of this Agreement or the matters contemplated hereby, without obtaining
the prior approval of the other parties hereto to the contents and the manner
of presentation and publication thereof. If either party determines, upon
written advice of counsel, that it is required by law to make any
announcement, it shall use its best efforts to consult with, and obtain the
written approval of, the other party before making the announcement.
13.12 Severability. If any provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy,
all other provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the
transaction contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties
as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled.
[Signature Page Follows]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed on its behalf as a sealed instrument as of the date first
above written.
Mercer Management Consulting, Inc.
By: _____________________________
Name:
Title:
CORPORATE DECISIONS, INC.
By: _____________________________
Name:
Title:
SHAREHOLDERS
_____________________________ _____________________________
David Morrison John Kania
_____________________________ _____________________________
Adrian Slywotzky Kirk Grosel
_____________________________ _____________________________
Kevin Mundt Charles Hoban
_____________________________ _____________________________
William Stevenson Richard Wise
_____________________________
Ted Moser
<PAGE>
EXHIBIT 5
Gregory F. Van Gundy, Esq.
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036
November 25, 1997
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036-2774
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
I am the General Counsel of Marsh & McLennan Companies, Inc., a Delaware
corporation (the "Company"), and am providing this opinion in connection with
the public offering by a certain stockholder of the Company (the "Selling
Stockholder") of up to 69,229 shares (the "Shares") of the Company's Common
Stock, par value $1.00 per share (the "Common Stock").
This opinion is being furnished in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the
"Act").
In connection with this opinion, I, or a lawyer acting under my general
supervision, have examined originals or copies, certified or otherwise
identified to my satisfaction, of (i) the Company's Registration Statement on
Form S-3 (the "Registration Statement") to be filed with the Securities and
Exchange Commission (the "Commission") on
November 25, 1997 under the Act, in accordance with the procedures of the
Commission permitting a delayed or continuous offering of the Shares pursuant to
such Registration Statement; (ii) the Asset Purchase Agreement dated November
17, 1997 by and among Mercer Management Consulting, Inc., Corporate Decisions,
Inc. ("CDI") and the stockholders of CDI, pursuant to which the Shares will be
issued; (iii) the certificates evidencing the Shares; (iv) the Restated
Certificate of Incorporation of the Company, as presently in effect; (v) the
Restated By-laws of the Company, as presently in effect; and (vi) certain
resolutions of the Board of Directors of the Company. I, or a lawyer acting
under my general supervision, have also examined originals or copies, certified
or otherwise identified to my satisfaction, of such records of the Company and
such agreements, certificates of public officials, certificates of officers or
other representatives of the Company and others, and such other documents,
certificates and records as I have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In this examination, I, or a lawyer acting under my general supervision, have
assumed the legal capacity of all natural persons, the genuineness of all
signatures, the authenticity of all documents submitted as originals, the
conformity to original documents of all documents submitted as certified,
conformed or photostatic copies and the authenticity of the originals of such
latter documents. In making this examination of documents executed or to be
executed by parties other than the Company, I have assumed that such parties had
or will have the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such parties
of such documents and the validity and binding effect thereof. As to any facts
material to the opinions expressed herein which I have not independently
established or verified, I have relied upon statements and representations of
officers and other representatives of the Company and others.
<PAGE>
I am admitted to the bar in the State of New York, and I do not express any
opinion as to the laws of any jurisdiction, except the General Corporation Law
of the State of Delaware.
Based upon and subject to the foregoing, I am of the opinion that the Shares
have been duly authorized and, upon the closing of the Transaction referred to
in the Registration Statement, will be validly issued, fully paid and
nonassessable.
I hereby consent to the filing of this opinion with the Commission as an exhibit
to the Registration Statement. I also consent to the reference to me under the
caption "Legal Matters" in the Registration Statement. In giving this consent, I
do not thereby admit that I am included in the category of persons whose consent
is required under Section 7 of the Act or the rules and regulations of the
Commission.
Very truly yours,
/s/Gregory F. Van Gundy, Esq.
General Counsel
<PAGE>
EXHIBIT 23(A)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Marsh & McLennan Companies, Inc. on Form S-3 of our reports dated February 26,
1997 (March 12, 1997 as to the last paragraph of Note 3), appearing in and
incorporated by reference in the Annual Report on Form 10-K of Marsh & McLennan
Companies, Inc. for the year ended December 31, 1996 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche LLP
---------------------------
Deloitte & Touche LLP
New York, New York
November 21, 1997
<PAGE>
EXHIBIT 23(B)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 registration statement of our report to the Board of
Directors of Johnson & Higgins dated March 11, 1997 included in Marsh &
McLennan's Form 8-K filed with the Commission on April 7, 1997 and to all
references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
-----------------------
Arthur Andersen LLP
November 20, 1997
New York, New York
<PAGE>
EXHIBIT 24(c)
POWER OF ATTORNEY
The undersigned, a Director of Marsh & McLennan Companies, Inc., a Delaware
corporation (the "Company"), does hereby constitute and appoint any one of A. J.
C. Smith, Frank J. Borelli and Gregory F. Van Gundy to be the undersigned's
agent and attorney-in-fact, each with the power to act fully hereunder without
the other and with full power of substitution to act in the name and on behalf
of the undersigned:
To sign or to transmit electronically in the name and on behalf of the
undersigned, as a Director of the Company, and file with the Securities and
Exchange Commission on behalf of the Company any registration statements
for the registration of the Company's common stock and related interests to
be issued pursuant to the Company's duly adopted employee benefit,
compensation and stock plans, any registration statements for the
registration of the Company's common stock for issuance in connection with
future acquisitions or for resale by the holders thereof who acquired or
will acquire such stock in connection with past or future acquisitions, and
any amendments or supplements to such registration statements; and
To execute and deliver, either through a paper filing or electronically,
any agreements, instruments, certificates or other documents which they
shall deem necessary or proper in connection with registration statements
and prospectuses and amendments or supplements thereto and generally to act
for and in the name of the undersigned with respect to such filings as
fully as could the undersigned if then personally present and acting.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
effective the 20th day of November, 1997.
/s/Lang of Monkton
The Rt. Hon. Lord Lang of Monkton
