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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)
The Kroll-O'Gara Company
------------------------
(Name of Issuer)
Common Stock, $.01 Par Value
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(Title of Class of Securities)
67083U 10 2
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(CUSIP Number)
Thomas M. O'Gara, 9113 LeSaint Drive, Fairfield, Ohio 45014
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 15, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
Schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box . [X]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 67083U 10 2
1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Thomas M. O'Gara
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions) (a) [ ]
(b) [X]
3) SEC USE ONLY
4) SOURCE OF FUNDS
n/a
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States Citizen
- --------------------------------------------------------------------------------
NUMBER (7) SOLE VOTING POWER
OF 2,426,152
SHARES ---------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED 7,500
BY ---------------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER
REPORTING 2,426,152
PERSON ---------------------------------------------------
WITH (10) SHARED DISPOSITIVE POWER
7,500
- --------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,433,652
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) [ ]
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.9%
14) TYPE OF REPORTING PERSON (See Instructions)
IN
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Item 1. Security and Issuer
This statement relates to the common stock, $.01 par value (the "Common
Stock"), of The Kroll-O'Gara Company (the "Company"). The address of the
Company's principal executive offices is 9113 LeSaint Drive, Fairfield, Ohio
45014.
Item 2. Identity and Background
This statement is filed by Thomas M. O'Gara, whose business address is
9113 LeSaint Drive, Fairfield, Ohio 45014. Mr. O'Gara is the Vice Chairman of
the Board and a director of the Company, a provider of specialized
risk-mitigation products and services. During the past five years, he has not
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) nor has he been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which proceeding he
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws. Mr.
O'Gara is a citizen of the United States of America.
Item 3. Sources and Amount of Funds or Other Consideration
Not applicable.
Item 4. Purpose of Transaction
Mr. O'Gara is a party to a Voting, Sale and Retention Agreement dated
as of November 15, 1999 (filed as an exhibit to this Schedule 13D and, as
applicable, incorporated by reference in response to this Item) under which he
has agreed to vote all his shares of Common Stock in favor of the mergers
described in the Agreement and against any action or agreement that would
impede, delay or discourage those mergers. Assuming completion of the
transactions referenced in the Agreement:
(1) Mr. O'Gara will dispose of all of his shares of Common Stock
at a price of $18.00 per share;
(2) two mergers will occur, with the result that the Company will
become a wholly-owned subsidiary of a Delaware corporation;
(3) subsequent to the mergers, Mr. O'Gara no longer will be a
director of the Company; and
(4) the Company will cease to be a public corporation and the
registration of its Common Stock under the Securities Exchange
Act of 1934 will be terminated.
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Item 5. Interest in Securities of the Issuer
(a) As of November 1, 1999, the Company had 22,212,440 shares of Common
Stock outstanding. Mr. O'Gara is the beneficial owner of 2,433,652 of these
shares, representing approximately 10.9% of the Common Stock, as computed in
accordance with Rule 13d-3(d)(1). Of Mr. O'Gara's 2,433,652 shares, 15,433 are
shares which he has the right to acquire under currently-exercisable stock
options. Other stock options held by him will not become exercisable within 60
days of the date of this filing.
(b) Mr. O'Gara has sole power to vote or direct the vote, and sole
power to dispose or direct the disposition, of 2,426,152 shares beneficially
owned by him. He has shared power to vote or direct the vote, and shared power
to dispose or direct the disposition, of 7,500 shares beneficially owned by him.
Mr. O'Gara shares voting and/or dispositive power over the
above-referenced 7,500 shares with his wife, Victoria O'Gara, whose address may
be deemed the same as his. Mrs. O'Gara is a citizen of the United States of
America. All other information required by Item 2 is inapplicable.
(c) None.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
See response to Item 4, above.
Item 7. Material to be Filed as Exhibits
Exhibit 1 -- Voting, Sale and Retention Agreement dated as of
November 15, 1999.
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: November 24, 1999 /s/ Thomas M. O'Gara
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Thomas M. O'Gara
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Exhibit 1
VOTING, SALE AND RETENTION AGREEMENT
AGREEMENT dated as of November 15, 1999, among BCP/KROG Acquisition
Company L.L.C., a Delaware limited liability company ("BCP LLC"), Kroll
Electronic Recovery, Inc., a Delaware corporation ("New Kroll Holdings"), the
parties listed on Schedule A hereto (collectively, the "Retaining Shareholders")
and the parties listed on Schedule B hereto (collectively, the "O'Gara
Shareholders", and together with the Retaining Shareholders, the
"Shareholders").
BACKGROUND
1. Immediately after the execution and delivery of this Agreement, The
Kroll-O'Gara Company, an Ohio corporation (the "Company"), New Kroll Holdings,
KER Acquisition, Inc., an Ohio corporation which is currently an indirect wholly
owned subsidiary of New Kroll Holdings ("Reorganization Merger Sub"), and
BCP/KROG Merger Corp., a Delaware corporation and a wholly owned subsidiary of
BCP LLC ("Recapitalization Merger Sub"), are entering into a Merger Agreement
(the "Merger Agreement"). (Capitalized terms used but not defined herein will
have the meanings assigned to them in the Merger Agreement.) The Merger
Agreement provides, among other things, for the following two mergers to occur:
o A "Reorganization Merger", in which Reorganization Merger Sub will
merge with and into the Company, with the shares of the Company being
converted into a like number of shares of New Kroll Holdings and the
shares of Reorganization Merger Sub being converted into shares of the
Company, such that the Company will become an indirect wholly owned
subsidiary of New Kroll Holdings, which itself will become the entity
publicly held by the shareholders who previously held shares in the
Company; and
o A "Recapitalization Merger", which will occur immediately following
consummation of the Reorganization Merger and in which Recapitalization
Merger Sub will merge with and into New Kroll Holdings, with the shares
of New Kroll Holdings (subject to certain exceptions described in this
Agreement) being converted into the right to receive cash and the
shares of Recapitalization Merger Sub being converted into shares of
New Kroll Holdings.
2. Each Shareholder owns the number of shares of common stock, par
value $.01 per share, of the Company (the "Company Common Stock") specified
opposite its name under the column "Owned Shares" on Schedule A (with respect to
the Retaining Shareholders) or Schedule B (with respect to the O'Gara
Shareholders). All of such shares, together with any shares of Company Common
Stock acquired of record or beneficially by such Shareholders in any capacity
after the date hereof and prior to the Effective Time of the Recapitalization
Merger, whether upon exercise of
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options, conversion of convertible securities, purchase, exchange or otherwise,
will be referred to herein as "Owned Shares". (It is understood that, following
consummation of the Reorganization Merger, references to "Company Common Stock"
will mean the shares of common stock, par value $.01 per share, of New Kroll
Holdings.)
3. As a condition to causing Recapitalization Merger Sub to enter into
the Merger Agreement, BCP LLC requires that this Agreement be entered into.
ARTICLE 1: REPRESENTATIONS AND WARRANTIES
1.1 Representations and Warranties of the Shareholders. Each
Shareholder, severally and not jointly, represents and warrants to BCP LLC as
follows:
(a) Authority; Enforceability. Such Shareholder has the legal capacity
(in the case of Shareholders that are natural persons) and all requisite power
and authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement has been
duly authorized, executed and delivered by such Shareholder and constitutes a
valid and binding obligation of such Shareholder enforceable against it in
accordance with its terms.
(b) No Conflicts. Except for filings required under the HSR Act, the
applicable requirements of the Securities Act and the Exchange Act, and the
applicable requirements of state securities, blue sky or takeover or other
corporate laws, (A) no filing with, and no permit, authorization, consent or
approval of, any Governmental Authority or any other person is necessary for the
execution of this Agreement by such Shareholder and the consummation by it of
the transactions contemplated hereby, and (B) the execution and delivery of this
Agreement by such Shareholder, the consummation of the transactions contemplated
hereby and compliance with the terms hereof by such Shareholder will not
conflict with, or result in any violation of, or default (with or without notice
or lapse of time or both) under any provision of, the certificate of
incorporation, by-laws or analogous documents of such Shareholder (if the
Shareholder is not a natural person) or any other agreement to which such
Shareholder is a party, including any voting agreement, shareholders agreement,
voting trust, trust agreement, pledge agreement, loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license, or violate any judgment, order, notice,
decree, statute, law, ordinance, rule or regulation applicable to such
Shareholder or to its property or assets.
(c) Ownership, Etc. of Shares. Such Shareholder is the
beneficial owner of the number of shares of Company Common Stock set forth
opposite such Shareholder's name under the Column "Owned Shares" on Schedule A
or Schedule B, as applicable. Such Shareholder has good and marketable title to
its Owned Shares, free and clear of any encumbrances, agreements, adverse
claims, liens or other
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arrangements with respect to the ownership of or the right to vote or dispose of
its Owned Shares (other than under this Agreement). On the date hereof, the
Owned Shares constitute all of the outstanding shares of Company Common Stock
owned of record or beneficially by such Shareholder. Such Shareholder does not
have record or beneficial ownership of any Shares not set forth on Schedule A or
Schedule B, as applicable. Such Shareholder has sole power of disposition with
respect to all of its Owned Shares and sole voting power with respect to the
matters set forth in Section 2(a) and sole power to demand dissenter's or
appraisal rights, in each case with respect to all of its Owned Shares, with no
restrictions on such rights, subject to applicable federal securities laws and
the terms of this Agreement. None of such Owned Shares is subject to any voting
trust, stockholders agreement or other agreement, arrangement or restriction
with respect to the voting or transfer of any of the Owned Shares, except as
contemplated by this Agreement and the Merger Agreement.
(d) Access to Information, Etc. Such Retaining Shareholder is an
"accredited investor" within the meaning of Regulation D promulgated under the
Securities Act. It has been provided with a copy of the Merger Agreement and has
had an opportunity to review it. It has been supplied with, or otherwise has had
access to, adequate information and the opportunity to ask questions in order to
make its own independent decision to retain shares of Company Common Stock or
have such shares convert into Series A Preferred Stock or Series B Preferred
Stock in the Recapitalization Merger, as provided herein and in the Merger
Agreement. It understands that the shares of Series A Preferred Stock and Series
B Preferred Stock that it may receive in the Recapitalization Merger will not
have been registered under the Securities Act and that the certificates for such
shares will bear an appropriate legend to such effect. It further understands
that such Retained Common Shares as well as the shares of Series A Preferred
Stock and Series B Preferred Stock to be received in the Recapitalization Merger
will bear an appropriate legend with respect to the stockholders' agreement
referred to in Section 6.1 below.
1.2 Representations and Warranties of BCP LLC and Recapitalization
Merger Sub. BCP LLC represents and warrants to each Shareholder as follows:
(a) Authority. It is duly organized, validly existing and in good
standing under the laws of Delaware. It has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by it
and constitutes its valid and binding obligation, enforceable against it in
accordance with its terms.
(b) No Conflicts; Enforceability. Except for filings required under the
HSR Act, the applicable requirements of the Securities Act and the Exchange Act,
and the applicable requirements of state securities, blue sky or takeover laws,
(A) no filing with, and no permit, authorization, consent or approval of, any
Governmental Authority or
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any other person is necessary for the execution of this Agreement by BCP LLC and
the consummation by it of the transactions contemplated hereby, and (B) the
execution and delivery of this Agreement by BCP LLC, the consummation by it of
the transactions contemplated hereby and its compliance with the terms hereof
will not conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, its certificate
of formation or limited liability company agreement or any other agreement to
which it is a party, including any voting agreement, stockholders agreement,
voting trust, trust agreement, pledge agreement, loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license, or violate any judgment, order, notice,
decree, statute, law, ordinance, rule or regulation applicable to BCP LLC or to
its property and assets.
ARTICLE 2: TRANSFER RESTRICTIONS
2.1 Transfer Restrictions. Each Shareholder hereby agrees during the
term of this Agreement not to (i) directly or indirectly sell, transfer, pledge,
encumber, assign or otherwise dispose of (including by gift) (collectively,
"Transfer"), or enter into any contract, option or other arrangement or
understanding (including any profit sharing arrangement) with respect to the
Transfer of, any of its Owned Shares to any person other than pursuant to the
terms of the Merger Agreement or this Agreement, (ii) enter into any voting
arrangement or understanding other than under this Agreement, whether by proxy,
voting agreement or otherwise, with respect to any of its Owned Shares, or (iii)
take any action that would make any of its representations or warranties
contained herein untrue or incorrect or have the effect of preventing or
impeding such Shareholder from performing any of its obligations under this
Agreement.
ARTICLE 3: SUPPORT OF TRANSACTIONS
3.1 Voting of Total Shares. At any Company Shareholders Meeting or at
any adjournment thereof or in any other circumstances upon which any
shareholders' vote, consent or other approval is sought, each O'Gara Shareholder
will attend such meeting, in person or by proxy, and will vote all of its Owned
Shares or otherwise provide requisite written consent (i) in favor of the
Mergers and the adoption and the approval of the principal terms of the Merger
Agreement and each of the other transactions contemplated by the Merger
Agreement, (ii) against any action or agreement that would result in a breach in
any material respect of any covenant,
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representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement, and (iii) against any action or agreement that would
impede, interfere with, delay or postpone or that would reasonably be expected
to discourage the Mergers, including, but not limited to:
(A) any extraordinary corporate transactions other than the
Mergers, such as a merger, consolidation or other business combination
involving the Company and its subsidiaries, a sale or transfer of a
material amount of assets of the Company and its subsidiaries, a sale
of a significant amount of capital stock, or options or rights to
purchase a significant amount of capital stock, of the Company or any
of its subsidiaries, or a reorganization, recapitalization or
liquidation of the Company and its subsidiaries;
(B) any amendment of the Company's Amended and Restated
Articles of Incorporation or Code of Regulations or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
prevent or nullify the Mergers, the Merger Agreement or any of the
other transactions contemplated by the Merger Agreement or change in
any manner the voting rights of any class of the Company's capital
stock;
(C) any change in the management or Board of Directors of the
Company not expressly contemplated by the Merger Agreement;
(D) any material change in the present capitalization or
dividend policy of the Company; or
(E) any other material change in the Company's corporate
structure or business.
3.2 No Other Proxies. Each O'Gara Shareholder will not, unless and
until this Agreement terminates in accordance with Section 7.2 hereof, grant
(other than through a proxy solicited by the Board of Directors of the Company
through which the Shareholder will provide voting instructions consistent with
the requirements of Section 3.1 hereof) any proxy or power of attorney with
respect to any of its Owned Shares, deposit any of its Owned Shares into a
voting trust or enter into any agreement (other than this Agreement),
arrangement or understanding with any person, directly or indirectly, to vote,
grant any proxy or give instructions with respect to the voting of any of its
Owned Shares. Each Shareholder further agrees not to commit or agree to take any
action inconsistent with any of the matters covered in this Article 3.
3.3 No Solicitation. Each O'Gara Shareholder hereby agrees during the
term of this Agreement that it will not, directly or indirectly, nor shall it
authorize, instruct or, if asked or notified, permit (to the extent feasible)
any of its trustees, advisors,
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agents, representatives or other intermediaries to, (i) solicit, initiate,
encourage or take any action to facilitate any submission of inquiries,
proposals or offers from any person relating to (A) any acquisition or purchase
of any or all of its Owned Shares or (B) any Acquisition Proposal, or agree to
or endorse any Acquisition Proposal, other than the transactions contemplated by
the Merger Agreement, or (ii) enter into or participate in any discussions or
negotiations regarding any of the foregoing or furnish to any other person any
information with respect to the Company's business, properties or assets or any
of the foregoing, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing (other than solely in his capacity as
an officer or director of the Company in the event that the Board of Directors
of the Company has concluded in accordance with Section 5.05 of the Merger
Agreement failing to take these or similar actions on the part of the Company
would be reasonably likely to cause the Board of Directors to be in breach of
its fiduciary duties to the shareholders of the Company under the OGCL).
Notwithstanding anything in this Agreement to the contrary, from and after the
date hereof, each O'Gara Shareholder shall promptly advise BCP LLC orally and in
writing of the receipt by any of them (or any of the other entities or persons
referred to above) of any Acquisition Proposal (it being understood that to the
extent solely received in their respective capacities as officers or directors
of the Company, their obligation to so advise BCP LLC shall be governed by the
Merger Agreement) or any inquiry which is likely to lead to any Acquisition
Proposal, the material terms and conditions of such Acquisition Proposal or
inquiry and the identity of the person making any such Acquisition Proposal or
inquiry. Each O'Gara Shareholder will keep BCP LLC fully informed of the status
and details of any such Acquisition Proposal or inquiry (it being understood
that to the extent such Acquisition Proposal was received solely in their
respective capacities as officers or directors of the Company, their obligation
to so advise BCP LLC shall be governed by the Merger Agreement).
3.4 Termination. Notwithstanding anything herein to the contrary, at
the option of BCP LLC, exercisable at any time, this Article 3 will
automatically terminate and the O'Gara Shareholders will be free to vote their
shares of Company Common Stock as they see fit and take any other any action
otherwise prohibited by this Article 3.
ARTICLE 4: PURCHASE AND SALE OF SHARES
4.1 Purchase and Sale. Upon the terms and subject to the conditions set
forth herein, the Retaining Shareholders, severally and not jointly, agree to
sell and transfer to BCP LLC, and BCP LLC agrees to purchase from the Retaining
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Shareholders, the number of Shares listed under the column "Cash-Out Shares"
corresponding to the respective Retaining Shareholders as set forth on Schedule
A (such Shares, the "Cash-Out Shares") for a purchase price per share equal to
the amount of cash Merger Consideration payable per share in the
Recapitalization Merger.
4.2 Closing; Delivery and Payment. The closing of the purchase and sale
of the Cash-Out Shares under Section 4.1 will occur immediately prior to the
Effective Time of the Reorganization Merger at the place where the closing of
the Mergers is to occur. At such closing, subject to the terms and conditions of
this Agreement, the Retaining Shareholders will deliver to BCP LLC certificates
representing the Cash-Out Shares respectively being sold by them duly endorsed
and in form for transfer to BCP LLC, and BCP will pay for the Cash-Out Shares
being purchased by wire transfer of immediately available funds to accounts
designated by the respective Retaining Shareholders no later than two business
days prior to such closing date.
4.3 Conditions to Closing.
(a) Conditions to Obligations of BCP LLC to Purchase. BCP LLC's
obligation to purchase the Cash-Out Shares in accordance with Section 4.1 is
subject to (i) the accuracy in all material respects of the representations and
warranties of the Retaining Shareholders in Article 1, (ii) the compliance in
all material respects by the Retaining Shareholders with their covenants
contained in this Agreement, (iii) the satisfaction of all of the conditions set
forth in the Merger Agreement applicable to the obligations of Recapitalization
Merger Sub to consummate the Recapitalization Merger (or, if any such conditions
have not yet been satisfied, BCP LLC shall have received satisfactory evidence
that all such unsatisfied conditions will be satisfied imminently), and (iv) the
concurrent sale to and purchase by BCP LLC of all the Cash-Out Shares held by
all the Retaining Shareholders.
(b) Conditions to Obligations of Retaining Shareholders to Sell. Each
Retaining Shareholder's obligation to sell the Cash-Out Shares being sold by it
in accordance with Section 4.1 is subject to (i) its receipt of satisfactory
evidence that the Mergers will be consummated immediately following the sale of
the Cash-Out Shares to BCP LLC, and (ii) the accuracy in all material respects
of the representations and warranties of BCP LLC in Article 1.
ARTICLE 5: TREATMENT OF SHARES IN THE RECAPITALIZATION MERGER
5.1 Waiver of Right to Receive Cash and Agreement to Retain Shares.
With respect to certain of the Retaining Shareholders, Schedule A identifies a
specified number of their shares as "Retained Common Shares" ("Retained
Shares"), which shares shall include the restricted stock granted to such
shareholders by the Company subject to certain terms and conditions which
continue to apply. Such Retaining
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Shareholders irrevocably waive their right to receive cash in respect of such
Retained Shares and acknowledge and agree that their Retained Shares will not be
converted into cash in the Recapitalization Merger but instead will remain
outstanding and unchanged following consummation of such Recapitalization
Merger. BCP LLC irrevocably waives its right to receive cash in respect of any
shares of Company Common Stock held by it at the effective time of the
Recapitalization Merger and acknowledges and agrees that such shares will not be
converted into cash in the Recapitalization Merger but instead will remain
outstanding and unchanged following consummation of the Recapitalization Merger.
5.2 Waiver of Right to Receive Cash and Agreement to Receive Series C
Preferred Stock and Series D Preferred Stock. With respect to Jules Kroll,
Schedule A identifies 1,666,666.67 of his shares of Company Common Stock as
"Shares to be Converted into Series C and D Preferred Stock" ("Series C/D
Conversion Shares"). Jules Kroll irrevocably waives his right to receive cash in
respect of such Series C/D Conversion Shares and acknowledges and agrees that
his respective Series C/D Conversion Shares will not be converted into cash in
the Recapitalization Merger but instead will be converted into 15,000 newly
issued shares of New Kroll Holdings' Series C Preferred Stock and 15,000 newly
issued shares of New Kroll Holdings' Series D Preferred Stock in accordance with
the terms of the Merger Agreement.
5.3 Waiver of Right to Receive Cash and Agreement to Receive Series A
Preferred Stock. With respect to American International Group, Inc. ("AIG"),
Schedule A identifies 1,111,111.12 of its shares of Company Common Stock as
"Shares to be Converted into Series A Preferred Stock" ("Series A Conversion
Shares"). AIG irrevocably waives its right to receive cash in respect of such
Series A Conversion Shares and acknowledges and agrees that such Series A
Conversion Shares will not be converted into cash in the Recapitalization Merger
but instead will be converted into 20,000 newly issued shares of New Kroll
Holdings' Series A Preferred Stock in accordance with the terms of the Merger
Agreement.
5.4 Appraisal Rights. Each Shareholder hereby irrevocably waives any
rights of appraisal with respect to the Mergers or rights to dissent from the
Mergers that such Shareholder may otherwise have, with respect to the
Reorganization Merger, under the OGCL or, with respect to the Recapitalization
Merger, under the Delaware General Corporation Law.
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ARTICLE 6: COVENANTS
6.1 Stockholders' and Conversion Agreements. (a) Each Retaining
Shareholder agrees that it will negotiate in good faith with BCP LLC with
respect to the terms of a stockholders' agreement to be entered into on terms
mutually satisfactory to such Retaining Shareholder and BCP LLC, including terms
as to customary registration rights.
(b) By the closings, BCP LLC and Jules Kroll will enter into a
Conversion Agreement reflecting the terms in the term sheet dated the date
hereof concerning such conversion.
6.2 Further Assurances. Each of the parties hereto agrees that it will,
from time to time, execute and deliver, or cause to be executed and delivered,
such additional or further consents, documents and other instruments as any of
the other parties to this Agreement may reasonably request for the purpose of
effectively carrying out the transactions contemplated by this Agreement.
ARTICLE 7: MISCELLANEOUS
7.1 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned by any of the parties hereto without
the prior written consent of the other parties hereto. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns.
7.2 Termination. This Agreement will terminate, and no party hereto
shall have any rights or obligations hereunder, upon the first to occur of (a)
the Effective Time of the Recapitalization Merger and (b) the termination of the
Merger Agreement in accordance with its terms. Furthermore, this Agreement will
terminate as to the O'Gara Shareholders if the Merger Agreement is amended
without their consent to reduce the Cash Merger Consideration.
7.3 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, including any written or oral
agreement or understanding, among or between the parties with respect to the
subject matter hereof.
7.4 Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto whose rights or
obligations are affected by such amendment. Without limiting the generality of
the foregoing, this Agreement may be amended to add to or subtract from the list
of Retaining Shareholders and/or to modify the treatment of Retaining
Shareholders' holdings as set forth on Schedule A, and such amendment need only
be executed by BCP LLC and
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those Retaining Shareholders who are being added to or subtracted from the list
of Retaining Shareholders or the treatment of whose holdings is being modified
as set forth on Schedule A.
7.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
if to BCP LLC or Recapitalization Merger Sub:
c/o Blackstone Management Partners III L.L.C.
345 Park Avenue
New York, New York 10154
Attention: Robert L. Friedman
Facsimile: (212) 583-5704
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Wilson S. Neely, Esq.
Facsimile: (212) 455-2502
if to the O'Gara Shareholders:
As they shall notify the other parties
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Kenneth Heitner, Esq.
Facsimile: (212) 310-8007
<PAGE> 16
11
if to AIG:
American International Group, Inc.
70 Pine Street
New York, NY 10270
Attention: Howard Smith
Facsimile: (212) 509-4543
if to the other Retaining Shareholders:
c/o the Kroll-O'Gara Company
900 Third Avenue
New York, NY 19922
Attention: [Name of Retaining Shareholder]
Facsimile: (212) 750-6194
with a copy to:
Latham & Watkins
885 Third Avenue Suite 1000
New York, NY 10022
Attention: Ron Hopkinson, Esq.
Facsimile: (212) 751 - 4864
7.6 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Wherever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
7.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement.
7.8 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
7.9 Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that, in addition to any other remedy to which it may be
entitled, at law or in equity, the parties shall be entitled to the remedy of
specific performance of the covenants and agreements contained herein and
injunctive and other equitable relief.
<PAGE> 17
12
7.10 No Termination or Closure of Trusts. Unless, in connection
therewith, the Shares held by any trust which are presently subject to the terms
of this Agreement are transferred upon termination to one or more Retaining
Shareholders and remain subject in all respects to the terms of this Agreement,
the Retaining Shareholders who are trustees shall not take any action to
terminate, close or liquidate any such trust and shall take all steps necessary
to maintain the existence thereof at least until the first to occur of (i) the
Effective Time of the Recapitalization Merger and (ii) the termination of the
Merger Agreement in accordance with its terms.
7.11 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto. Except as provided in the
preceding sentence, nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person any rights, benefits or remedies or any
nature whatsoever under or by reason of this Agreement.
7.12 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
7.13 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
7.14 Definitions; Construction. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially Owned by
all other Persons with whom such Person would constitute a "group" as described
in Section 13(d)(3) of the Exchange Act.
<PAGE> 18
(b) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
(c) In the event of a stock dividend or distribution, or any change in
the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall be deemed to refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.
7.15 Shareholder Capacity. Notwithstanding anything herein to the
contrary, no person executing this Agreement who is, or becomes during the term
hereof, a director of the Company makes any agreement or understanding herein in
his capacity as such a director, and the agreements set forth herein shall in no
way restrict any director in the exercise of his fiduciary duties as a director
of the Company. Each Shareholder has executed this Agreement solely in his
capacity as the record or beneficial holder of such Shareholder's Owned Shares
or as the trustee of a trust whose beneficiaries are the beneficial owners of
such Shareholder's Owned Shares.
IN WITNESS WHEREOF, each of BCP LLC, the Company, New Kroll Holdings,
and the Shareholders listed below have caused this Agreement to be duly
executed, as of the date first written above.
SIGNATURE PAGE TO VOTING, SALE AND RETENTION AGREEMENT
BCP/KROG ACQUISITION COMPANY L.L.C.
By: Blackstone Capital Partners III Merchant
Banking Fund L.P., as managing member
By: Blackstone Management Associates III L.L.C.,
its General Partner
By: /s/
--------------------------------------------
Name: Robert L. Friedman
Title: Member
KROLL ELECTRONIC RECOVERY, INC.
By: /s/
---------------------------------------------
Name:
Title:
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/
---------------------------------------------
Name:
Title:
<PAGE> 19
SIGNATURE PAGE TO VOTING, SALE AND RETENTION AGREEMENT
/s/
---------------------------------------------
Jules B. Kroll
/s/
---------------------------------------------
Michael G. Cherkasky
/s/
---------------------------------------------
Michael D. Shmerling
<PAGE> 20
SIGNATURE PAGE TO VOTING, SALE AND RETENTION AGREEMENT
/s/
---------------------------------------------
Thomas M. O'Gara
/s/
---------------------------------------------
Victoria O'Gara
/s/
---------------------------------------------
Wilfred T. O'Gara
Thomas M. O'Gara Family Trust
By: /s/ as Trustee
------------------------------------------
Name:
Thomas M. & Victoria O'Gara Foundation
By: /s/ as Trustee
------------------------------------------
Name:
Thomas M. & Victoria O'Gara Foundation
By: /s/ as Trustee
------------------------------------------
Name:
<PAGE> 21
SCHEDULE A: RETAINING SHAREHOLDERS
<TABLE>
<CAPTION>
Shares to be Shares to be
Total Converted into Converted into
Name of Number of Retained Cash-Out Series A Series C and D
Retaining Shareholder Owned Shares Common Shares Shares Preferred Stock Preferred Stock
<S> <C> <C> <C> <C> <C>
Jules B. Kroll(1) 2,879,991 666,667.33 546,657 - 1,666,666.67
Michael Cherkasky(2) 28,410 23,410 5,000 - -
Michael Shmerling 355,000 175,000 180,000 - -
American International Group, Inc. 1,444,212 0 333,100.88 1,111,111.12 -
--------- ---------- ------------ ------------ ------------
Total 4,707,613 865,077.33 1,064,757.88 1,111,111.12 1,666,666.67
========= ========== ============ ============ ============
</TABLE>
- -----------------
(1) Does not include 192,560 shares held by trusts for the benefit of Mr.
Kroll's adult children, in which Mr. Kroll disclaims any beneficial
interest.
(2) Does not include options to purchase 171,529 shares.
<PAGE> 22
SCHEDULE B: O'GARA SHAREHOLDERS
<TABLE>
<CAPTION>
Name of Total Number of
O'Gara Shareholder Owned Shares
------------------ ------------
<S> <C>
Thomas O'Gara(3)................................................ --
Thomas M. O'Gara Family Trust................................... 2,399,719
Thomas M. O'Gara IRA/Rollover, Dillon Read...................... 11,000
Thomas M. & Victoria O'Gara Foundation.......................... 7,500
Victoria O'Gara IRA/Rollover, Paine Webber...................... 2,000
Wilfred T. O'Gara(4)............................................ 243,042
---------
Total................................................. 2,663,261
=========
</TABLE>
- -----------------
(3) Thomas O'Gara holds options to purchase 23,150 shares.
(4) Wilfred T. O'Gara holds options to purchase 112,447 shares.
