SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
The Kroll-O'Gara Company
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
67083U 10 2
(CUSIP Number)
Jules B. Kroll
900 Third Avenue
New York, New York 10022
(212) 833-3221
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
November 15, 1999
(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 which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box: [ ]
Page 1 of 6 pages
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SCHEDULE 13D
CUSIP No. 67083U 10 2 Page 2 of 6 Pages
- ---------------------
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jules B. Kroll
- -------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
Not applicable. (b) [ ]
- -------------------------------------------------------------------------------
3) SEC USE ONLY
- -------------------------------------------------------------------------------
4) SOURCE OF FUNDS
Not applicable.
- -------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
Not applicable.
- -------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- -------------------------------------------------------------------------------
7) SOLE VOTING POWER
NUMBER OF 2,879,991
SHARES ------------------------------------------------
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY -0-
EACH ------------------------------------------------
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 2,879,991
WITH ------------------------------------------------
10) SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
2,879,991
- -------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
Not applicable.
- -------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.0% (See Item 5)
- -------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON
IN
- -------------------------------------------------------------------------------
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Schedule 13D
Item 5. Interest in Securities of the Issuer.
(a) Mr. Kroll beneficially owns 2,879,991 shares of Common Stock,
representing approximately 13.0% of the outstanding shares of Common Stock. *
(c) See Item 6.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Mr. Kroll has entered into a Voting, Sale and Retention Agreement (the
"Voting, Sale and Retention Agreement"), dated as of November 15, 1999, by and
among BCP/KROG Acquisition Company L.L.C. ("BCP LLC"), Kroll Electronic
Recovery, Inc. ("New Kroll Holdings"), the parties listed on Schedule A attached
thereto (the "Retaining Shareholders") and the parties listed on Schedule B
attached thereto (the "O'Gara Shareholders"). A copy of the Voting, Sale and
Retention Agreement is attached hereto as Exhibit 1, and is hereby incorporated
herein by reference in its entirety.
Immediately after the execution and delivery of the Voting, Sale and
Retention Agreement, the Company, New Kroll Holdings, KER Acquisition, Inc., an
indirect wholly owned subsidiary of New Kroll Holdings ("Reorganization Merger
Sub"), and BCP/KROG Merger Corp., a wholly owned subsidiary of BCP LLC
("Recapitalization Merger Sub") entered into an Agreement and Plan of Mergers
(the "Merger Agreement"), dated as of November 15, 1999.
The Merger Agreement provides, among other things, for the following
two mergers to occur: (i) 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 (ii) a
"Recapitalization Merger", which will occur immediately following consummation
of the Reorganization Merger, 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 the Voting, Sale and Retention Agreement)
being converted into the right to receive cash and the shares of
Recapitalization Merger Sub being converted into shares of New Kroll Holdings.
Pursuant to the Voting, Sale and Retention Agreement, Mr. Kroll has agreed to
vote all of his shares of Common Stock in favor of the Mergers.
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* Based upon the 22,212,440 shares of Common Stock reported by the Company to be
issued and outstanding as of November 1, 1999 in its Quarterly Report on Form
10-Q for the quarter ended September 30, 1999.
Page 3 of 6 pages
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(a) Each share of the Common Stock, without par value, of New Kroll
Holdings ("New Kroll Holdings Common Stock") outstanding immediately prior to
the effective time of the Recapitalization Merger ("Recapitalization Effective
Time") that is then owned by either BCP LLC or the Retaining Shareholders as
"Retained Shares" in accordance with the Voting, Sale and Retention Agreement
shall not be converted and shall not be otherwise affected by the
Recapitalization Merger and shall remain outstanding as one share of New Kroll
Holdings Common Stock following the Recapitalization Effective Time.
(b) Each issued and outstanding share of New Kroll Holdings Common
Stock that is identified as a "Series A Conversion Share" in the Voting, Sale
and Retention Agreement shall be converted into the right to receive .018 of a
fully paid and nonassessable share of 13% Cumulative Participating Preferred
Stock, Series A, of New Kroll Holdings.
(c) Each issued and outstanding share of New Kroll Holdings Common
Stock that is identified as a "Series C-D Conversion Share" in the Voting, Sale
and Retention Agreement shall be converted into the right to receive .009 of a
fully paid and nonassessable share of 9% Cumulative Participating Preferred
Stock, Series C (the "Series C Preferred Stock"), of New Kroll Holdings and .009
of a fully paid and nonassessable share of 9% Cumulative Participating Preferred
Stock, Series D (the "Series D Preferred Stock"), of New Kroll Holdings.
Each issued and outstanding share of New Kroll Holdings Common Stock
outstanding immediately prior to the Recapitalization Effective Time (other than
Recapitalization Dissenting Shares, as defined in the Merger Agreement, those
shares identified in clauses (a), (b) and (c) above and such shares held by New
Kroll Holdings or any subsidiary of New Kroll Holdings) shall be converted into
the right to receive $18 in cash (the "Cash Merger Consideration").
Each share of New Kroll Holdings Common Stock held in the treasury of
New Kroll Holdings and each share of New Kroll Holdings Common Stock owned by
Recapitalization Merger Sub or any direct or indirect wholly-owned subsidiary of
New Kroll Holdings immediately prior to the Recapitalization Effective Time
shall cease to be outstanding and shall be cancelled and retired without payment
of any consideration therefor, and cease to exist. Pursuant to the Voting, Sale
and Retention Agreement and the Merger Agreement, as a result of the Mergers,
Mr. Kroll will (i) receive Cash Merger Consideration for 546,657 shares of New
Kroll Holdings Common Stock, (ii) retain 666,667.33 shares of the New Kroll
Holdings Common Stock, and (iii) will convert 1,666,666.67 shares of New Kroll
Holdings Common Stock into 15,000 shares of Series C Preferred Stock and 15,000
shares of Series D Preferred Stock.
The foregoing descriptions of the Voting, Sale and Retention Agreement
and the transactions contemplated by the Merger Agreement are summaries only and
are qualified in their entirety by reference to the complete copy of the Voting,
Sale and Retention Agreement attached as Exhibit 1 to this Amendment No. 2.
Page 4 of 6 pages
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Item 7. Material to be Filed as Exhibits.
Exhibit 1 - Voting, Sale and Retention Agreement
Page 5 of 6 pages
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SIGNATURE
After reasonable inquiry and to my best knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: November 23, 1999
/s/ Jules B. Kroll
-----------------------
Name: Jules B. Kroll
Page 6 of 6 pages
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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 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.)
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2
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 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,
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3
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 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
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4
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, 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
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5
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, 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).
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6
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 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.
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7
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 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.
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.
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8
(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 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.
<PAGE>
9
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
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
<PAGE>
10
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.
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.
<PAGE>
11
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.
(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.
<PAGE>
12
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/ Robert L. Friedman
------------------------------
Name: Robert L. Friedman
Title: Member
KROLL ELECTRONIC RECOVERY, INC.
By: /s/
-----------------------------------
Name:
Title:
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/
-----------------------------------
Name:
Title:
<PAGE>
SIGNATURE PAGE TO VOTING, SALE AND RETENTION AGREEMENT
/s/ Jules B. Kroll
----------------------------------
Jules B. Kroll
/s/ Michael G. Cherkasky
----------------------------------
Michael G. Cherkasky
<PAGE>
SIGNATURE PAGE TO VOTING, SALE AND RETENTION AGREEMENT
/s/ Michael D. Shmerling
---------------------------------
Michael D. Shmerling
<PAGE>
SIGNATURE PAGE TO VOTING, SALE AND RETENTION AGREEMENT
/s/ Thomas M. O'Gara
----------------------------------
Thomas M. O'Gara
/s/ Victoria O'Gara
---------------------------------
Victoria O'Gara
/s/ Wilfred T. O'Gara
---------------------------------
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:
<PAGE>
SIGNATURE PAGE TO VOTING, SALE AND RETENTION AGREEMENT
Thomas M. & Victoria O'Gara Foundation
By: /s/ as Trustee
------------------------------------
Name:
<PAGE>
SCHEDULE A: RETAINING SHAREHOLDERS
<TABLE>
<CAPTION>
Shares to be
Total Converted into Shares to be
Number of Retained Series A Converted into
Name of Owned Common Cash-Out Preferred Series C and D
Retaining Shareholder Shares Shares Shares 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 80,000 -- --
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.
Krolls adult children, in which Mr. Kroll disclaims any beneficial
interest.
(2) Does not include options to purchase 171,529 shares.
<PAGE>
SCHEDULE B: O'GARA SHAREHOLDERS
Name of Total Number of
O'Gara Shareholder Owned Shares
------------------ ------------
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
=========
- ----------
(3) Thomas O'Gara holds options to purchase 23,150 shares.
(4) Wilfred T. O'Gara holds options to purchase 112,447 shares.
