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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
THE KROLL-O'GARA COMPANY
(Name of Issuer)
COMMON STOCK, $0.01 PAR VALUE
(Title of Class of Securities)
501050108
(CUSIP Number)
Kathleen E. Shannon
Vice President and Secretary
American International Group, Inc.
70 Pine Street
New York, New York 10270
(212) 770-5123
(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 a 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 [ ].
The information required on 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.
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CUSIP NO. 501050108
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
American International Group, Inc.
I.R.S. Identification No. 13-2592361
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Incorporated under the laws of the State of Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF 1,444,212
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 0
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 1,444,212
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,444,212
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.5%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
HC, CO
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Item 1. Security and Issuer.
This Statement relates to the Common Stock, $0.01 par value
(the "Common Stock"), of THE KROLL-O'GARA COMPANY (the "Company"). This
Amendment No. 1 to Schedule 13D amends and supplements Items 1, 4, 5 and 6 of
the Statement on Schedule 13D dated December 1, 1997 (the "Schedule 13D"). The
principal executive offices of the Company are located at 9113 LeSaint Drive,
Fairfield, Ohio 45014. Capitalized terms used herein and not otherwise defined,
shall have the meaning ascribed to such terms as in the Schedule 13D.
Item 4. Purpose of Transaction.
On November 15, 1999, the Company announced that it had
entered into a definitive agreement with Blackstone Capital Partners III
Merchant Banking Fund L.P. pursuant to which shares held by all shareholders of
the Company, other than AIG and certain members of management, will be acquired
for $18.00 per share in cash, subject to shareholder approval (the "Merger").
In connection with such agreement, AIG has entered into a Voting, Sale and
Retention Agreement dated as of November 15, 1999 and attached hereto as
Exhibit 3 to the Schedule 13D (the "Voting Agreement"), among BCP/KROG
Acquisition Company L.L.C. ("BCP LLC"), Kroll Electronic Recovery, Inc. ("New
Kroll Holdings") and certain shareholders of the Company identified on the
schedules to the Voting Agreement, pursuant to which AIG (i) agrees to sell a
portion of the shares of Common Stock owned by it to BCP LLC, (ii) agrees to
waive its right to receive cash in the Merger with respect to a specified
number of shares of Common Stock ("Retained Common Shares"), (iii) agrees and
acknowledges that the Retained Common Shares will be converted into newly
issued shares of New Kroll Holdings' Series A Preferred Stock in accordance
with the Merger and (iv) agrees that it will negotiate in good faith with BCP
LLC with respect to the terms of a stockholders agreement among the
stockholders of New Kroll Holdings. If the shareholders of the Company approve
the Merger, AIG intends to deliver its shares of Common Stock as agreed in the
Voting Agreement.
Item 5. Interest in Securities of Issuer.
(a) and (b). The information required by these paragraphs is
set forth in Items 7 through 11 and Item 13 of the cover page to this Schedule
13D and is based upon the number of shares of Common Stock outstanding on
November 1, 1999 (22,212,440), as reported by the Company in its Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999.
(c) AIG and, to the best of its knowledge, each of the Covered
Persons have not engaged in any transactions in the Common Stock during the past
60 days other than in connection with the Voting Agreement.
(d) and (e). Not applicable.
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Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
The information required by this Item 6 is set forth in
Item 4.
Item 7. Materials to be Filed as Exhibits.
(a) Voting, Sale and Retention Agreement.
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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 23, 1999
AMERICAN INTERNATIONAL GROUP, INC.
By /s/ Kathleen E. Shannon
-----------------------------------
Name: Kathleen E. Shannon
Title: Vice President and Secretary
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EXHIBIT 3
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:
- 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
- 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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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
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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 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.
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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, 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
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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, 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
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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 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
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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 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
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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.
(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
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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.
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> 10
10
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> 11
11
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.
(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
<PAGE> 12
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> 13
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/ Michael Cherkasky
-------------------------------
Name: Michael Cherkasky
Title: President
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ Howard I. Smith
--------------------------
Name: Howard I. Smith
Title: Executive Vice President, Chief
Financial Officer and Comptroller
<PAGE> 14
SIGNATURE PAGE TO VOTING, SALE AND RETENTION AGREEMENT
/s/ Jules B. Kroll
-----------------------------------
Jules B. Kroll
/s/ Michael G. Cherkasky
-----------------------------------
Michael G. Cherkasky
<PAGE> 15
SIGNATURE PAGE TO VOTING, SALE AND RETENTION AGREEMENT
/s/ Michael D. Shmerling
-----------------------------------
Michael D. Shmerling
<PAGE> 16
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/ Thomas M. O'Gara as Trustee
----------------------------
Name: Thomas M. O'Gara
Thomas M. & Victoria O'Gara Foundation
By: /s/ Thomas M. O'Gara as Trustee
----------------------------
Name: Thomas M. O'Gara
<PAGE> 17
SIGNATURE PAGE TO VOTING, SALE AND RETENTION AGREEMENT
Thomas M. & Victoria O'Gara Foundation
By: /s/ Victoria O'Gara as Trustee
----------------------------
Name: Victoria O'Gara
<PAGE> 18
SCHEDULE A: RETAINING SHAREHOLDERS
<TABLE>
<CAPTION>
Shares to be Shares to be
Name of Total Number Retained Converted into Converted into
Retaining Shareholder of Common Shares Cash-Out Shares Series A Series C and D
Owned 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> 19
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.
