1
EXHIBIT 10.33
================================================================================
PLAN OF REORGANIZATION AND STOCKHOLDERS AGREEMENT
by and among
AMERICAN INTERNATIONAL GROUP, INC.,
XXXXX X. XXXXX
and
XXXXX HOLDINGS, INC.
-------------
June 15, 1993
-------------
================================================================================
2
TABLE OF CONTENTS
PAGE
----
I. REORGANIZATION
1.1 AIG Contribution........................................................................ 2
1.2 Kroll Contribution...................................................................... 3
1.3 Effect of the Reorganization............................................................ 3
1.4 Closing................................................................................. 6
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Due Organization, Etc................................................................... 5
2.2 Licenses; Permits....................................................................... 6
2.3 Authorization; Execution and Delivery of
Agreement. ............................................................................ 6
2.4 No Conflicts; Consents.................................................................. 7
2.5 Capital Stock........................................................................... 9
2.6 No Brokers.............................................................................. 10
2.7 Litigation and Claims................................................................... 11
2.8 Financial Statements; Taxes............................................................. 11
2.9 Use of Proceeds......................................................................... 12
III. REPRESENTATIONS AND WARRANTIES OF AIG
3.1 Due Organization, Etc................................................................... 13
3.2 Authorization; Execution and Delivery of
Agreement.............................................................................. 13
3.3 No Consent.............................................................................. 14
3.4 No Brokers.............................................................................. 14
3.5 Litigation and Claims................................................................... 14
3.6 Investment Purposes..................................................................... 15
3.7 Accredited Investor..................................................................... 15
IV. REPRESENTATIONS AND WARRANTIES OF XX. XXXXX
4.1 Title to the Kroll Group Stock.......................................................... 15
4.2 Authority............................................................................... 15
V. REGISTRATION RIGHTS
5.1 Piggy-Back Registration................................................................. 16
5.2 Filings; Information.................................................................... 29
5.3 Participation in Underwritten Registrations............................................. 22
5.4 Indemnification and Contribution Relating to
Registrations.......................................................................... 22
i
3
Page
----
VI. COVENANTS OF THE COMPANY
6.1 Financial Statements and Other Reports.................................................. 27
6.2 Composition of Board.................................................................... 28
6.3 Restrictions on the Company............................................................. 29
VII. COVENANTS OF AIG AND XX. XXXXX
7.1 Term.................................................................................... 31
7.2 Restrictions on AIG..................................................................... 31
7.3 Voting.................................................................................. 33
7.4 Sale of Shares.......................................................................... 34
7.5 Tag-Along Rights........................................................................ 36
7.6 Confidentiality......................................................................... 37
7.7 Stock Legend............................................................................ 38
VIII. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
8.1 Conditions to the Obligations of AIG.................................................... 39
8.2 Conditions to the Obligations of the Company and Xx. Xxxxx.............................. 41
IX. GENERAL PROVISIONS
9.1 Public Disclosure and Confidentiality................................................... 43
9.2 Survival of Representations, Warranties and
Agreements............................................................................ 43
9.3 Termination............................................................................. 43
9.4 Notices................................................................................. 44
9.5 Specific Performance.................................................................... 45
9.6 Fees and Expenses....................................................................... 46
9.7 Entire Agreement........................................................................ 46
9.8 Waivers and Amendments.................................................................. 46
9.9 Governing Law........................................................................... 47
9.10 Binding Effect; No Assignment.......................................................... 47
9.11 Counterparts............................................................................ 47
9.12 Further Assurances...................................................................... 47
9.13 Captions................................................................................ 48
9.14 Construction and Representation by Counsel.............................................. 48
9.15 No Third-Party Beneficiaries............................................................ 48
9.16 Definitions............................................................................. 48
ii
4
SCHEDULES
---------
1.2 Common Stock Issued to the Existing Stockholders
2.1 Encumbrances and Partially Owned Subsidiaries
EXHIBITS
--------
A Form of Notes
iii
5
PLAN OF REORGANIZATION AND STOCKHOLDERS AGREEMENT
-------------------------------------------------
PLAN OF REORGANIZATION AND STOCKHOLDERS AGREEMENT (the
"AGREEMENT") dated as of June 15, 1993 by and among AMERICAN INTERNATIONAL
GROUP, INC., a Delaware corporation ("AIG"), XXXXX X. XXXXX and XXXXX HOLDINGS,
INC., a Delaware corporation (the "COMPANY").
WHEREAS, Xx. Xxxxx owns 92% of the capital stock of each of
Xxxxx Associates, Inc., a Delaware corporation ("Associates"), Xxxxxxxx/Kroll
Environmental Services, Inc., a Louisiana corporation ("H/K"), Xxxxxxx Partners,
Inc., a Delaware corporation ("Xxxxxxx"), and Kroll Associates U.K. Limited, a
corporation organized under the laws of England ("U.K.") (Associates, H/K,
Xxxxxxx and O.K., together with the Subsidiaries (as hereinafter defined) of
each such entity, are hereinafter referred to, collectively, as the "KROLL
GROUP" and, individually, as a "MEMBER OF THE KROLL GROUP");
WHEREAS, AIG, Xx. Xxxxx and all of the other holders of
capital stock of the members of the Kroll Group (other than the Subsidiaries)
(such holders are hereinafter referred to as the "EXISTING STOCKHOLDERS") wish
to provide for the reorganization described herein (the "REORGANIZATION");
WHEREAS, in connection with the Reorganization, AIG will
contribute cash and notes to the Company and will receive, in exchange therefor,
23,100 shares (the "Shares") of the Company's Class A Common Stock, par value
$.01 per share ("'CLASS A COMMON STOCK");
6
WHEREAS, in connection with the Reorganization, Xx. Xxxxx and
the Existing Stockholders will contribute all of the capital stock held by them
of the members of the Kroll Group (the "OUTSTANDING STOCK") and will receive, in
exchange therefor, shares of the Company's Common Stock, par value $.01 per
share ("Common Stock"), as a result of which the Company shall become a holding
company of the Kroll Group; and
WHEREAS, it is intended that the Reorganization shall
constitute a tax-free transaction in which the contribution to the Company of
cash, notes and the capital stock of the Kroll Group shall be made solely in
exchange for the capital stock of a corporation that, immediately following such
contribution, is controlled by the parties making such contributions, as
provided in Section 351 of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements of the parties hereto contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the satisfaction or waiver of the conditions
hereof, the parties hereto do hereby agree as follows:
I. REORGANIZATION
1.1. AIG CONTRIBUTION. Upon the terms and subject to the
conditions set forth in this Agreement, the Company agrees to issue and deliver
to AIG, the Shares. As
2
7
consideration for the Shares, at the Closing (as hereinafter defined), AIG shall
contribute to the Company $14,999,990, of which $10,000,000 shall be paid in
immediately available funds and $4,999,990 shall be paid in the form of two
notes substantially in the form of Exhibit A to this Agreement (the
"Notes").
1.2. KROLL CONTRIBUTION. Upon the terms and subject to the conditions
set forth in this Agreement, the Company agrees to issue and deliver to Xx.
Xxxxx and each of the Existing Stockholders the number of shares of Common Stock
set forth opposite his name on Schedule 1.2 to this Agreement. As consideration
for such shares of Common Stock, at the Closing, Xx. Xxxxx and each of the
Existing Stockholders shall contribute to the Company all of the shares of
Outstanding Stock then held by him, free and clear of all Encumbrances (as
hereinafter defined), and together with all rights now and hereafter attaching
thereto. As used herein, "ENCUMBRANCE" shall mean any lien, pledge, claim,
option, encumbrance, mortgage, hypothecation, equity, charge, or any other
similar limitation, except any such limitation contemplated by this Agreement.
1.3. EFFECT OF THE REORGANIZATION. By virtue of the
Reorganization, on the Closing Date (as hereinafter defined), except as set
forth in Schedule 2.l, each member of the Kroll Group will be a wholly owned
subsidiary of the Company.
3
8
1.4. CLOSING. (a) The Closing of the transactions provided for
in this Agreement (the "CLOSING") shall take place at the offices of Cleary,
Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m.
on June 15, 1993 or such other place and at such other time as the parties may
agree after each of the conditions set forth in Article VIII of this Agreement
shall have been fulfilled or waived in accordance herewith (the "CLOSING DATE").
(b) At the Closing, the Company will deliver to AIG the
following:
(i) a stock certificate representing the Shares;
and
(ii) the documents referred to in Section 8.1 of
this Agreement.
(c) At the Closing, the Company will deliver to Xx. Xxxxx and
each of the Existing Stockholders a stock certificate representing the number of
shares of Common Stock to which he is entitled as set forth in Section 1.2 of,
and Schedule 1.2 to, this Agreement;
(d) At the Closing, AIG will deliver the following:
(i) to the Company, the consideration for the
Shares, in the forms and amounts as set
forth in Section 1.1; and
(ii) to the Company and Xx. Xxxxx, the documents
referred to in Section 8.2 of this
Agreement.
4
9
(e) At the Closing, Xx. Xxxxx and each of the Existing
Stockholders will deliver the following:
(i) to the Company, all of the shares of
Outstanding Stock held by such individual;
and
(ii) to AIG, the documents referred to in Section
8.1 of this Agreement.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of AIG and
Xx. Xxxxx that:
2.1. DUE ORGANIZATION, ETC. The Company and each member of the
Kroll Group is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and each has
all requisite corporate power and authority to own, operate and lease its
respective properties and assets and to conduct its respective businesses as now
conducted and is qualified to do business in each state or other jurisdiction
where the nature of its properties, assets or businesses requires such
qualification other than where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
condition, financial or otherwise, business, operations, properties or assets
(collectively, the "CONDITION") of the Company or any member of the Kroll Group.
All of the outstanding shares of capital stock of each member
5
10
of the Kroll Group are validly issued, fully paid and nonassessable, and, except
as set forth on Schedule 2.1 of this Agreement, all of such outstanding shares
shall, as of the Closing, be owned, directly or indirectly, by the Company free
and clear of all Encumbrances. As used herein, "SUBSIDIARY" means a corporation
or other business entity or arrangement a majority of the outstanding voting
securities or ownership interests of which is owned, directly or indirectly, by
the Company, by one or more other Subsidiaries or by the Company and one or more
other Subsidiaries.
2.2. LICENSES; PERMITS. Each member of the Kroll Group has
obtained and maintains in full force and effect all permits, licenses, consents,
approvals, registrations, memberships, authorizations and qualifications under
all federal, state, local and foreign laws and regulations, and with all
federal, state, local and foreign governmental or regulatory authorities (each,
an "AUTHORITY"), required for the conduct by it of its businesses and the
ownership or possession by it of its properties and assets other than where the
failure to obtain or maintain such permits, licenses, consents, approvals,
registrations, memberships, authorizations or qualifications would not,
individually or in the aggregate, have a material adverse effect on the
Condition of the Company or any member of the Kroll Group.
2.3. AUTHORIZATION; EXECUTION AND DELIVERY OF AGREEMENT. (a)
The execution and delivery of this Agreement,
6
11
the issuance of the Shares to AIG and the Common Stock to Xx. Xxxxx and the
Existing Stockholders and management under the Restricted Stock Plan (as
hereinafter defined) and the consummation of the transactions contemplated
hereby (i) are within the corporate power and authority of the Company, and (ii)
have been duly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
(b) As of the Closing Date, the Shares shall be in due and
proper form, duly authorized by all necessary corporate action on the part of
the Company, and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration therefor set forth herein,
including payment in full of all amounts due on the Notes, the Shares will be
validly issued, fully paid and nonassessable.
2.4. NO CONFLICTS; CONSENTS. The execution and delivery of
this Agreement, the issuance of the Shares to AIG and the Common Stock to Xx.
Xxxxx and the Existing Stockholders and management under the Restricted Stock
Plan and the consummation of the transactions contemplated hereby do not
conflict with, or result in any violation of or default under, or permit the
acceleration of any obligation under, or the creation or imposition of any
Encumbrance on, any of the
7
12
properties or assets of the Company or any member of the Kroll Group under, (i)
any provision of the certificate of incorporation or by-laws of the Company or
any member of the Kroll Group, (ii) any indenture, lease, mortgage, deed of
trust, loan agreement or other agreement or instrument, or any permit, of the
Company or any member of the Kroll Group or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation of any Authority to which the
Company or any member of the Kroll Group is a party or by which any of them is
bound, other than as set forth herein or where such conflict, violation,
default, acceleration or Encumbrance would not, individually or in the
aggregate, have a material adverse effect on the Condition of the Company and
the Kroll Group taken as a whole or on the benefits intended to be afforded to
AIG or Xx. Xxxxx under this Agreement. No consent, approval, order or
authorization of, or registration, declaration, filing with or notice to, any
Authority or third party is required to be made or obtained by the Company or
any member of the Kroll Group (including, without limitation, under any
environmental or occupational, health and safety laws) in order to execute or
deliver this Agreement, effect the Reorganization, issue the Shares or Common
Stock or consummate the transactions contemplated hereby except (i) the
amendment to the Stockholders' Agreement dated as of March 20, 1992 among the
Kroll Group, Xxxxxx X. XxXxxxx and Xxxxxx X. Xxxxxxx, (ii) the amendment to the
Stockholders' Agreement
8
13
dated as of December 31, 1992 among the Kroll Group, Xxxxxx X. XxXxxxx, Xxxxxx
X. Xxxxxxx and Xxxxxx Xxxx, (iii) the consent of Teachers Insurance and Annuity
Association of America and Xxxxxxx Xxxx (collectively, "TIAA") under the Note
Purchase Agreement dated as of December 15, 1989 and as amended by Consent and
Amendment No. 1 dated November 4, 1991 (the "Note Purchase Agreement") and (iv)
where the failure to make or obtain any such consent, approval, order,
authorization, registration, declaration, filing or notice would not have a
material adverse affect on the Condition of the Company and the Kroll Group
taken as a whole or on the benefits intended to be afforded to AIG or Xx. Xxxxx
under this Agreement.
2.5. CAPITAL STOCK. (a) As of the Closing Date, the authorized
capital stock of the Company will consist solely of 153, 800 shares of Common
Stock, of which 67, 663 shares shall be issued to Xx. Xxxxx and the Existing
Stockholders and outstanding, and 46,200 shares of Class A Common Stock, of
which 23,100 shares shall be issued to AIG and outstanding. Upon the
consummation of the transactions contemplated by this Agreement all of the
issued and outstanding shares of Common Stock and Class A Common Stock will have
been validly issued and fully paid and non-assessable.
(b) As of the Closing Date, other than as contemplated by this
Agreement, there shall not be authorized or outstanding any subscriptions,
options, conversion rights,
9
14
warrants or other agreements, securities or commitments of any nature whatsoever
(whether oral or written and whether firm or conditional) obligating the Company
or any Subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, to any person any shares of Common Stock or any other shares of the
capital stock of the Company or any shares of the capital stock of any
Subsidiary, or any securities convertible into or exchangeable for any such
shares, or obligating any such person to grant, extend or enter into any such
agreement or commitment, except for 9,240 restricted shares of Common Stock
authorized for issuance under the Company's Restricted Stock Plan dated as of
the Closing Date (the "Restricted Stock Plan"), of which 7,700 shares of Common
Stock are being awarded as of the Closing Date and 1,540 shares of Common Stock
shall be reserved for supplemental awards to participants under the plan. Except
as provided herein, no class of capital stock of the Company is entitled to
preemptive rights.
2.6. NO BROKERS. No Broker, finder, investment banker or other
person or entity has acted on behalf of the Company in connection with the
transactions contemplated by this Agreement in such manner as to give rise to
any valid claim against AIG for any broker's fee, finder's fee or similar
compensation in connection with the transactions contemplated by this Agreement.
10
15
2.7. LITIGATION AND CLAIMS. There is no claim, prosecution,
suit, action, arbitration, proceeding, investigation or review pending or, to
the knowledge of the Company, threatened against or affecting the Company, any
member of the Kroll Group or any of their respective properties or assets which
questions the validity of this Agreement, the Shares, the Common Stock or any
action taken or to be taken pursuant hereto, seeks to prohibit or impose any
limitations on AIG's ownership of the Shares or Xx. Xxxxx'x ownership of the
Common Stock or which is reasonably likely to have a material adverse effect on
the transactions contemplated by this Agreement. Neither the Company nor any
member of the Kroll Group is in default with respect to any judgment, decree,
injunction, rule or order of any court, arbitrator or Authority outstanding
against or binding upon the Company or any member of the Kroll Group, other than
where any such defaults would not, individually or in the aggregate, have a
material adverse effect on the Condition of the Company or any member of the
Kroll Group.
2.8. FINANCIAL STATEMENTS; TAXES. (a) The combined financial
statements for the fiscal year ended December 31, 1992 (the "FINANCIAL
STATEMENTS") delivered to AIG were prepared in accordance with generally
accepted accounting principles, applied on a consistent basis during the periods
involved (except as may be set forth in the notes thereto), and on that basis
fairly present the combined
11
16
financial position, assets and liabilities of the Kroll Group as at the dates
thereof and the results of their operations and changes in financial position
for the periods then ended, subject, in the case of any interim financial
statements, to normal year-end adjustments and any other adjustments described
therein.
(b) Except as otherwise set forth in the Financial Statements,
all tax returns, statements, reports, withholding obligations and forms
thereinafter collectively referred to as "RETURNS") required to be filed with
any Authority on or before the Closing Date by the Company or any member of the
Kroll Group have been filed or will be filed on or before the Closing Date in
accordance with all applicable laws; the Company and all relevant members of the
Kroll Group have timely paid all taxes shown as due and payable on the Returns;
and no action, suit, proceeding, investigation, audit or claim relating to taxes
is proposed or pending against the Company or any member of the Kroll Group that
would affect the Financial Statements; other than where such failure to file or
pay or where such action, suit, proceeding, investigation, audit or claim would
not, individually or in the aggregate, have a material adverse effect on the
Condition of the Company or any member of the Kroll Group.
2.9. USE OF PROCEEDS. The Company intends to use the proceeds
from the capital contribution for the Shares for general corporate purposes.
12
17
III. REPRESENTATIONS AND WARRANTIES OF AIG
AIG represents and warrants to the Company and Xx.
Xxxxx that:
3.1. DUE ORGANIZATION, ETC. AIG is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.2. AUTHORIZATION; EXECUTION AND DELIVERY OF AGREEMENT. AIG
has a requisite corporate power and authority to execute this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of AIG. This
Agreement has been duly executed and delivered by AIG and this Agreement
constitutes, and, when executed and delivered by AIG, the Notes will constitute,
a legal, valid and binding obligation of AIG enforceable against AIG in
accordance with its terms. Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, nor the compliance
with or fulfillment of the terms and provisions hereof will conflict with or
result in a breach or violation of, or constitute with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancelation or acceleration) under, any of the terms, conditions or provisions
of (i) any corporate governance documents of AIG, (ii) any agreement, indenture,
mortgage,
13
18
lien, lease or other instrument or restriction of any kind to which AIG is a
party or by which AIG is otherwise bound or affected or (iii) any order, writ,
injunction, decree, statute, rule or regulation applicable to AIG.
3.3. NO CONSENT. No consent, approval, order or authorization
of, or registration, declaration, filing with or notice to, any Authority is
required to be made or obtained by AIG in order to execute or deliver this
Agreement or to consummate the transactions contemplated hereby.
3.4. NO BROKERS. No Broker, finder, investment banker or other
person or entity has acted on behalf of AIG in connection with the transactions
contemplated by this Agreement in such manner as to give rise to any valid claim
against the Company, any member of the Kroll Group or any Subsidiary for any
broker's fee, finder's fee or similar compensation in connection with the
transactions contemplated by this Agreement.
3.5. LITIGATION AND CLAIMS. There is no claim, prosecution,
suit, action, arbitration, proceeding, investigation or review pending or, to
the knowledge of AIG, threatened against or affecting AIG, or any of its
properties or assets which questions the validity of this Agreement or any
action taken pursuant hereto or which is reasonably likely to have a material
adverse effect on the transactions contemplated by this Agreement.
14
19
3.6. INVESTMENT PURPOSES. AIG is acquiring the Shares solely
for its own account for the purpose of investment and not with a view to the
public distribution thereof.
3.7. ACCREDITED INVESTOR. AIG (i) has such knowledge and
experience in business and financial matters and with respect to investments in
securities to enable it to understand and evaluate the risks of such investments
and form an investment decision with respect thereto and is able to bear the
risk of such investment for an indefinite period and to afford a complete loss
thereof and (ii) is an "accredited investor" as defined in Rule 501 ta) of
Regulation D under the Securities Act of 1933, as amended (the "SECURITIES
ACT").
IV. REPRESENTATIONS AND WARRANTIES OF XX. XXXXX
Xx. Xxxxx hereby represents and warrants to AIG and the
Company that:
4.1. TITLE TO THE KROLL GROUP STOCK. Xx. Xxxxx is the lawful
owner, of record and beneficially, of 92% of the capital stock of Associates,
H/K, Xxxxxxx and U.K. and has good and marketable title to such shares, free and
clear of any Encumbrances.
4.2. AUTHORITY. Xx. Xxxxx has all requisite power and
authority and capacity to enter into this Agreement and to perform his
obligations hereunder and this
15
20
Agreement is a legal, valid and binding obligation of Xx. Xxxxx, enforceable
against him in accordance with its terms.
V. REGISTRATION RIGHTS
5.1. PIGGY-BACK REGISTRATION. (a) If at any time after the
Closing the Company proposes to file a registration statement under the
Securities Act with respect to an offering of securities of the Company for the
account of Xx. Xxxxx, then the Company shall give written notice of such
proposed filing to AIG as soon as practicable (but in no event less than ten
business days before the anticipated filing date), and such notice shall offer
AIG the opportunity to include some or all of its Registrable Securities (as
hereinafter defined) in such registration (a "PIGGY-BACK REGISTRATION"). The
Company shall use its best efforts to cause the managing Underwriter or
Underwriters (as hereinafter defined) of a proposed underwritten offering to
permit the Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any similar
securities of the Company included therein. As used herein, "REGISTRABLE
SECURITIES" means the Shares until (i) a registration statement covering such
Shares has been declared effective by the Securities and Exchange Commission
(the "COMMISSION") and the Shares have been disposed of pursuant to such
effective registration statement or (ii) such Shares are sold under
circumstances in which all of the applicable
16
21
conditions of Rule 144 (or any similar provisions then in force) under the
Securities Act are met. As used herein, "UNDERWRITER" means a securities dealer
who purchases any Registrable Securities as principal and not as part of such
dealer's market-making activities.
(b) The Company will bear all expenses of registrations
pursuant to Section 5.1(a) of this Agreement (other than underwriting discounts
and commissions and brokerage commissions and fees, if any, payable with respect
to Registrable Securities sold by AIG), including, without limitation,
registration fees, printing expenses, expenses of compliance with Blue Sky or
other state securities laws, and legal and audit fees incurred by the Company in
connection with such registration and amendments or supplements in connection
therewith.
(c) Notwithstanding anything contained herein, if the managing
Underwriter or Underwriters of an offering described in Section 5.1(a) concludes
that the aggregate size of such offering is such that the price of the
securities offered would be materially and adversely affected by inclusion of
the Registrable Securities requested to be included by AIG, then the number of
Registrable Securities to be offered for the account of AIG shall be reduced to
the extent necessary to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing Underwriter or
Underwriters; PROVIDED that the
17
22
proportion by which the amount of such class of securities intended to be
offered by AIG is reduced shall not exceed the proportion by which the amount of
such class of securities intended to be offered by persons other than the
Company is reduced. As used herein, "Person" means an individual or a
corporation, partnership, association, trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
(d) To the extent not inconsistent with applicable law, AIG
agrees not to effect any public sale or distribution of the security being
registered (except as part of such registration) or a similar security of the
Company, or any securities convertible into or exchangeable or exercisable for
such securities, including a sale pursuant to Rule 144 under the Securities Act,
during the ninety day period prior to, and during the 180 day period beginning
on the effective date of such registration statement, if and to the extent
requested by the Company in the case of a non-underwritten public offering or if
and to the extent requested by the managing Underwriter or Underwriters in the
case of an underwritten public offering.
(e) In the event AIG chooses to sell some or all of its
Registrable Securities pursuant to Section 5.1(a), AIG shall have the option to
convert those Shares it intends to sell in such Piggy-Back Registration to
Common Stock on a share for share basis and if the managing Underwriter or
18
23
Underwriters of such offering concludes that the failure of AIG to convert such
Shares to common Stock would adversely affect the marketing of the securities
offered, AIG agrees to convert such Shares to Common Stock.
5.2. FILINGS; INFORMATION. Whenever AIG requests that any
Registrable Securities be registered pursuant to Section 5.1(a) hereof, the
Company will use its best efforts to include such Registrable Securities in such
registered sale and in connection with any such request:
(a) the Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement thereto,
furnish to AIG copies of such registration statement as proposed to be filed,
and thereafter furnish to AIG such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein), the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as AIG may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by AIG;
(b) After the filing of the registration statement relating to
the Registrable Securities, the Company will promptly notify AIG of any stop
order issued or threatened by the Commission and take all reasonable actions
required to
19
24
prevent the entry of such stop order or to remove it if entered;
(c) the Company will immediately notify AIG, at any time when
a prospectus relating to Registrable Securities is required to be delivered
under the Securities Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly make available to AIG any such
supplement or amendment;
(d) the Company will enter into customary agreements
(including an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities;
(e) the Company will make available for inspection by AIG and
any attorney, accountant or other professional retained by AIG (collectively the
"INSPECTORS"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "RECORDS") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information
20
25
reasonably requested by any Inspectors in connection with such registration
statement. Records which the Company determines, in good faith, to be
confidential and which it notifies the Inspectors are confidential shall not be
disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a material misstatement or omission in such
registration statement or (ii) the release of such Records is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction; and
(f) the Company will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(g) The Company may require AIG to promptly furnish in writing
to the Company such information regarding the distribution of the Registrable
Securities as the Company may from time to time reasonably request and such
other information as may be required, in the opinion of counsel to the Company,
in connection with such registration.
AIG agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 5.2(c) hereof,
AIG will forthwith discontinue disposition of Registrable Securities pursuant to
the registration statement covering such Registrable Securities until AIG's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 5.2(c) hereof, and,
21
26
if so directed by the Company, AIG will deliver to the Company all copies, other
than permanent file copies then in AIG's possession, of the most recent
prospectus covering the Registrable Securities at the time of receipt of such
notice.
5.3. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. AIG may not
participate in any underwritten registration hereunder unless AIG completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and this Agreement.
5.4. INDEMNIFICATION AND CONTRIBUTION RELATING TO
REGISTRATIONS. (a) The Company agrees to indemnify and hold harmless AIG, its
officers, directors and agents, and each Person, if any, who controls AIG within
the meaning of Section 20 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), from and against any and
all losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact on the part of the Company contained
in any registration statement or prospectus relating to the Registrable
Securities (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission or alleged omission on the part of the Company to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading,
22
27
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information furnished in writing to the Company by AIG or on AIG's behalf
for use therein; PROVIDED, HOWEVER, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of AIG if
the Person asserting any such loss, claim, damage or liability purchased the
Registrable Securities from AIG and if it is determined that it was the
responsibility of AIG to provide such Person with a current copy of the
prospectus and such current copy of the prospectus would have cured the defect
giving rise to such loss, claim, damage or liability.
(b) AIG agrees to indemnify and hold harmless the Company, its
officers, directors and agents and each Person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to AIG, but only with reference to information relating to AIG furnished in
writing by AIG or on AIG's behalf for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus; PROVIDED HOWEVER that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of the Company if the Person asserting any such loss,
claim, damage
23
28
or liability purchased the Registrable Securities from the Company and if it is
determined that it was the responsibility of the Company to provide such Person
with a current copy of the prospectus and such current copy of the prospectus
would have cured the defect giving rise to such loss, claim, damage or
liability.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be entitled to be sought pursuant to Section 5.4(a) or 5.4(b),
such Person (an "INDEMNIFIED PARTY") shall promptly notify the Person against
whom such indemnity may be sought ("INDEMNIFYING PARTY") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses. The failure of an Indemnified Party to give
notice as described in the preceding sentence shall relieve the Indemnifying
Party of its obligation to indemnify the Indemnified Party, or to contribute to
the amount paid or payable by such Indemnified Party, under this Agreement to
the extent that the Indemnifying Party shall have been prejudiced as a result of
such failure. In any such proceeding, any Indemnified Party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have
24
29
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
Indemnified Party and the Indemnifying Party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for all such Indemnified Parties, and
that all such fees and expenses shall be reimbursed as they are incurred. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment.
(d) If the indemnification provided for in this Section 5.4 is
unavailable to the Indemnified Parties in respect of any losses, claims, damages
or liabilities referred to herein for any reason other than the failure to give
notice as provided in Section 5.4(c), then each such Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified
25
30
Party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect both the relative benefits received by
the Company on the one hand and AIG on the other from the relevant offering, and
the relative fault of the Company on the one hand and of AIG on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits-received by the Company on the one hand
and AIG on the other shall be deemed to be in the same proportion as the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company bears to that received by
AIG. The relative fault of the Company on the one hand and of AIG on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Company and AIG agree that it would not be just and
equitable if contribution pursuant to this Section 5.4(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
26
31
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim. No
Person guilty of fraudulent misrepresentation (within the meaning of Section 11
(f) of the Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
VI. COVENANTS OF THE COMPANY
The Company covenants and agrees that:
6.1. FINANCIAL STATEMENTS AND OTHER REPORTS. For so long as
AIG owns Shares which represent more than 5% of the voting power of the
Company's outstanding voting securities:
(a) the Company will, as soon as practicable and in any event
within 45 days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, furnish to AIG consolidated statements of
income, retained earnings, cash flows and changes in stockholders' equity of the
Company and its Subsidiaries for the period from the beginning of the then
current fiscal year to the end of such quarterly period, and a consolidated
balance sheet of the Company and its Subsidiaries as of the end of such
quarterly
27
32
period, setting forth in each case in comparative form figures for the
corresponding period or date in the preceding fiscal year, all in reasonable
detail and certified by an authorized financial officer of the Company, subject
to changes resulting from year-end adjustments;
(b) the Company will, as soon as practicable and in any event
within 90 days after the end of each fiscal year, furnish to AIG consolidated
statements of income, retained earnings, cash flows and changes in stockholders'
equity of the Company and its Subsidiaries for such year, and a consolidated
balance sheet of the Company and its Subsidiaries as of the end of such year,
setting forth in each case in comparative form the corresponding figures from
the preceding fiscal year, all in reasonable detail and examined and reported on
by independent public accountants of recognized standing selected by the
Company; and
(c) the Company will, promptly upon transmission thereof,
furnish to AIG copies of all such financial statements, proxy statements,
notices and reports as it shall send to all its stockholders generally and
copies of all such registration statements (without exhibits), other than
registration statements relating to employee benefit or dividend reinvestment
plans, and any regular and periodic reports as it may file with the Commission.
6.2. COMPOSITION OF BOARD. The Board of Directors of the
Company (the "Board") shall be comprised as of the Closing of four members and
AIG shall be entitled to designate
28
33
one individual (which designee shall not include individuals whose membership on
the Board would be a violation of law) for membership on the Board. If during
the Voting Agreement Period (as hereinafter defined) the size of the Board is
changed, at each election of directors during the Voting Agreement Period, AIG
shall be entitled to designate such number of individuals for membership on the
Board such that the ratio of the total number of members of the Board designated
by AIG to the total number of members of the Board equals the ratio of the total
voting power of securities of the Company then beneficially owned by AIG to the
total voting power of securities of the Company then outstanding, rounded to the
nearest whole number.
6.3. RESTRICTIONS ON THE COMPANY. (a) If, during the Agreement
Period (as hereinafter defined), the Company issues additional Equity Securities
(as hereinafter defined) (an "ADDITIONAL ISSUANCE"), except for issuances
pursuant to (i) any currently outstanding stock option, warrant, convertible
security or other right to purchase shares of any equity securities of the
Company, (ii) any benefit plan or other employee or director arrangement adopted
or implemented after the date of this Agreement, (iii) an employee stock
ownership plan not in excess of 5% of the outstanding Equity Securities or (iv)
any stock split, stock dividend or similar distribution made available to
holders of Common Stock generally, then AIG shall be entitled to purchase from
the Company during the twenty-five day period following the date
29
34
on which the Company has given AIG written notice of the occurrence of the
Additional Issuance, at a price per share equal to the fair market value per
share of the consideration to be received for the Equity Securities to be issued
in such Additional Issuance, that number of Equity Securities that equals the
product of (x) the total number of Equity Securities offered in the Additional
Issuance by (y) a fraction, the numerator of which equals the number of Equity
Securities owned by AIG immediately prior to the Additional Issuance and the
denominator of which equals the aggregate number of Equity Securities
outstanding immediately prior to the Additional Issuance, rounded to the nearest
whole share.
(b) During the period from the date hereof through December
31, 1994, the Company agrees to limit the salary paid by the Company to Xx.
Xxxxx to no more than $500,000 on an annual basis; PROVIDED, HOWEVER, that, in
the event the Board, in the good faith exercise of its business judgment,
determines that Xx. Xxxxx'x performance has been exceptional and/or that the
financial results of the Kroll Group's operation has been extraordinarily good,
the Board may consider an increase to Xx. Xxxxx'x salary. During such period,
any bonuses paid to Xx. Xxxxx shall be made on the same basis as currently in
place at Associates. Thereafter, the Board will determine Xx. Xxxxx'x
compensation in the ordinary exercise of its fiduciary duties.
30
35
VII. COVENANTS OF AIG AND XX. XXXXX
7.1. TERM. The agreements contained in this Article VII, other
than those contained in Section 7.3, shall remain in effect (the "AGREEMENT
PERIOD") until the earlier to occur of the following events: (i) AIG does not
own Shares that represent more than 5% of the voting power of the Company's
outstanding voting securities and (ii) such agreements are terminated or
superseded pursuant to Sections 9.3 or 9.8.
7.2. RESTRICTIONS ON AIG. AIG agrees that, without the prior
written consent of the Company or as expressly contemplated by the Agreement,
AIG will not, and will cause each of its Affiliates (as hereinafter defined) not
to, singly or as part of a group, directly or indirectly:
(a) acquire or propose to acquire any equity securities of the
Company ("EQUITY SECURITIES") or any rights to acquire any Equity Securities;
(b) make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are defined or used in Regulation 14A under the
Exchange Act) with respect to any Equity Securities (including by the execution
of actions by written consent), become a "participant" in any "election contest"
(as such terms are defined or used in Rule 14a-11 under the Exchange Act) with
respect to the Company or seek to advise, encourage or influence any person or
entity with respect to the voting of any Equity Securities;
31
36
(c) initiate, propose or otherwise solicit, or participate in
the solicitation of, stockholders for the approval of one or more stockholder
proposals with respect to the Company as described in Rule 14a-8 under the
Exchange Act or knowingly induce any other individual or entity to initiate any
stockholder proposal relating to the Company;
(d) form, join or in any way participate in a "group" or act
in concert with any other person or entity with respect to any Equity Securities
of the Company;
(e) participate in or encourage the formation of any group
which owns or seeks or offers to acquire beneficial ownership of securities of
the Company or rights to acquire such securities or which seeks or offers to
affect control of the Company or for the purpose of circumventing any provision
of this Agreement;
(f) act in concert with any other entity with respect to any
Equity Securities or otherwise act, alone or in concert with others, to seek or
offer to control or influence, in any manner, the management, the Board or the
policies of the Company; PROVIDED, HOWEVER, that the participation in
deliberations of the Board by the individual or individuals designated by AIG
for election to the Board in accordance with Section 6.2 hereof shall not be
considered a violation of this Section 7.2(f); or
(g) solicit, seek or offer to negotiate with or make any
public statement or public proposal to the Company (or non-public statement or
proposal that would impose a legal
32
37
obligation on the Company to make a public announcement), or otherwise make any
public announcement with respect to (i) any form of business combination or
transaction involving the Company, (ii) any form of restructuring,
recapitalization or similar transaction with respect to the Company, (iii) any
request to amend, waive or terminate the provisions of this Article VII or (iv)
any proposal, statement or action inconsistent with the terms of this Article
VII, or (v) knowingly encourage, aid or otherwise induce any person to take any
of the actions set forth in this Section 7.2. As used herein, an "AFFILIATE" of
a specified Person is a Person that directly, or indirectly, controls, or is
controlled by, or is under common control with, the Person specified.
7.3. VOTING. For a period of five years from the Closing (or
until such earlier time as AIG no longer owns Shares) (the "VOTING AGREEMENT
PERIOD"), AIG shall be present, in person or by proxy, at all meetings of
stockholders of the Company so that all Equity Securities beneficially owned by
AIG shall be counted for purposes of determining the presence of a quorum at
such meetings. The Voting Agreement Period shall be extended automatically for a
period of one year on the last day of each year of the Agreement Period (each a
"VOTING EXTENSION DATE") unless, prior to any Voting Extension Date, AIG
delivers to the Company a written notice of election stating that the Voting
Agreement Period shall not be extended for an additional one-year period. If AIG
elects not to extend the Voting Agreement Period on or prior to any Voting
33
38
Extension Date, the Voting Agreement Period shall not thereafter be extended and
the provisions contained in this Section 7.3 shall terminate on the last day of
the Voting Agreement Period; PROVIDED, that in no event shall the remaining term
of the Voting Agreement Period exceed the Agreement Period. During the Voting
Agreement Period, in all elections of directors of the Company, each of AIG and
Xx. Xxxxx shall cast its or his votes in favor of election of the nominees of
the Board nominated in accordance with Section 6.2 hereof. Upon the date AIG is
no longer entitled to designate any nominees for election to the Board, AIG
shall cause those members of the Board that have been designated by AIG to
resign from the Board, effective immediately.
7.4. SALE OF SHARES. (a) During the five year period
following the Closing, AIG shall not sell, transfer or otherwise
dispose of any of the Shares to any Person other than the
Company.
(b) After the date that is five years from the date hereof,
AIG may sell, transfer or otherwise dispose of any Shares provided that (i) the
sale, transfer or disposition is made in accordance with the requirements of the
Securities Act, (ii) the sale, transfer or disposition is made in accordance
with Section 7.4(d) hereof, (iii) the transferee is not a Person that is,
directly or indirectly, engaged in any business or line of business that (in the
reasonable opinion of the Company) competes in any material way with any
business or line of business then engaged in by the Company or any of
34
39
its Subsidiaries and (iv) AIG will use all reasonable efforts to see that no
Person owns more than 5% of the voting power of the Company's securities as a
result of any such sale, transfer or disposition.
(c) Notwithstanding the provisions of paragraphs (a) and (b)
of this Section 7.4, (i) AIG may sell or otherwise transfer its Shares pursuant
to Article V or Section 7.5 and (ii) AIG may sell or otherwise transfer Shares
at any time to one or more Affiliates of AIG that agree to be bound by the terms
of this Agreement.
(d) Other than for sales and transfers described in paragraph
(c) of this Section 7.4, in the event that AIG desires to sell, transfer or
otherwise dispose of Shares as permitted by this Section 7.4, AIG shall notify
the Company and Xx. Xxxxx in writing at least sixty days prior to effecting such
transfer and in such notice shall state the number of Shares to be transferred,
the consideration to be received by AIG and the date on which the proposed
transfer is to occur (the "TRANSFER NOTICE"). The Company and Xx. Xxxxx shall
each have the option, exercisable by notice given in writing to AIG within
thirty days of the date of the Transfer Notice, to acquire all or part of the
Shares AIG desires to transfer for the consideration specified in the Transfer
Notice on a date no later than thirty days from the date the Company or Xx.
Xxxxx elects to exercise its or his option. In the event that both the Company
and Xx. Xxxxx elect to acquire all or part of the Shares specified in the
Transfer Notice and
35
40
such elections would require the transfer of a greater number of Shares than are
so specified, then the Shares specified in such Transfer Notice shall be divided
between the Company and Xx. Xxxxx pro rata in proportion to the number of Shares
which each elected to purchase. If the Company and Xx. Xxxxx do not elect to
exercise any option granted pursuant to this paragraph (d), or the elections of
the Company and Xx. Xxxxx do not result in the purchase by them of the full
number of Shares specified in the Transfer Notice, AIG may transfer such number
of Shares, after giving effect to the elections, if any, of the Company and Xx.
Xxxxx, on the terms set forth in the Transfer Notice at any time within sixty
days of the date of the Purchase Notice. If AIG does not consummate the
transactions giving rise to such option within such sixty-day period then any
subsequent sale or transfer shall be subject again to this paragraph (d) as if
AIG had not provided notice to the Company and Xx. Xxxxx of a proposed sale or
transfer.
7.5. TAG-ALONG RIGHTS. Xx. Xxxxx agrees, in connection with
any binding agreement reached by him with any Person (other than an Affiliate of
Xx. Xxxxx or a Member of the Kroll Family (as hereinafter defined)) relating to
the sale by Xx. Xxxxx of all or a portion of his shares of Common Stock and if
requested by AIG, to cause the prospective purchaser to purchase from AIG up to
that number of the Shares then owned by AIG which equals the product of (x) the
total number of Shares then owned by AIG multiplied by (y) a fraction, the
numerator of which equals the number of shares
36
41
of Common Stock to be purchased from Xx. Xxxxx and the denominator of which
equals the sum of the total number of shares of Common Stock then owned by Xx.
Xxxxx plus the number of shares of Common Stock then owned by any other
stockholder of the Company entitled to participate in such sale (the "SALE
RATIO"). Xx. Xxxxx shall notify AIG in writing of any such binding agreement,
indicating the price and other material terms and conditions of the proposed
sale, the intended closing date of such sale and the Sale Ratio. Any purchase
from AIG under this Section 7.5 shall be at the same price per Share and on the
same terms and conditions as apply to the purchase from Xx. Xxxxx. AIG will have
ten days from receipt of such notice to notify Xx. Xxxxx in writing of its
election to exercise its rights under this Section 7.5. If Xx. Xxxxx does not
receive notice from AIG within such ten-day period, AIG will be deemed to have
elected not to exercise its rights under this Section 7.5 and Xx. Xxxxx may
complete the proposed sale of his Common Stock at the price and on the terms and
conditions of his notice to AIG. As used herein, "MEMBER OF THE KROLL FAMILY"
shall mean any spouse, child, adopted or natural, grandchild, parent, sibling,
or in-law of Xx. Xxxxx.
7.6. CONFIDENTIALITY. AIG agrees that any information obtained
by it pursuant to this Agreement (including without limitation in accordance
with Section 5.2 and 6.1 of this Agreement), or as a result of the transactions
contemplated by the Agreement, shall be, and shall be kept, confidential and
shall not be used by AIG for any purpose,
37
42
other than a registered sale of its Registrable Securities, unless and until
such information is made generally available to the public for a period of not
less than three days. AIG further agrees that it will, upon learning that
disclosure of any information is sought in a court of competent jurisdiction or
any other governmental agency, give notice to the Company and allow the Company,
at its expense, to undertake appropriate action to prevent disclosure of such
information.
7.7. STOCK LEGEND. Each of AIG and Xx. Xxxxx acknowledges and
agrees that the certificates for the Class A Common Stock and the Common Stock
of the Company shall bear the following legends:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), or
under any state securities or blue sky laws. The shares may not be
sold, transferred, pledged or hypothecated in the absence of an
effective registration statement for the shares under the Act or an
opinion of counsel for Kroll Holdings, Inc. that registration is not
required under the Act.
These shares are subject to certain limitations on transfer
set forth in an agreement dated June 15, 1993 between American
International Group, Inc., Xxxxx X. Xxxxx and Xxxxx Holdings, Inc.
including, but not limited to, restrictions on transfer, pledge,
encumbrances or other dispositions. A copy
38
43
of such agreement is on file with the Secretary of Kroll Holdings,
Inc."
VIII. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
8.1. CONDITIONS TO THE OBLIGATIONS OF AIG. The obligations of
AIG to consummate the transactions contemplated by this Agreement are subject to
the fulfillment, at or before the Closing Date, of each of the following
conditions (subject to the right of AIG to waive any such condition):
(a) The representations and warranties of each of the Company
and Xx. Xxxxx contained in this Agreement and in any statement, certificate,
exhibit, schedule or other document delivered by the Company and Xx. Xxxxx
pursuant hereto or in connection with the transactions contemplated hereby,
shall have been true and correct in all material respects as of the date of this
Agreement and shall be true and correct in all material respects at and as of
the Closing Date as if made on and as of the Closing Date (except to the extent
that any representation or warranty is made as of a specific date, in which case
such representation or warranty shall be true and correct as of such specified
date). The Company and Xx. Xxxxx shall have performed in all material respects
all of its obligations under this Agreement to be performed at or prior to the
Closing Date; and AIG shall have received at the time of the Closing
certificates from the Company and Xx. Xxxxx reasonably satisfactory in form to
AIG
39
44
certifying to the satisfaction of all of the conditions set forth in this
Section 8.1(a).
(b) No action, suit or proceeding shall have been instituted
or threatened which seeks to restrain, prohibit or declare illegal the
transactions contemplated by this Agreement by an Authority. No temporary
restraining order or injunction shall have been issued by any court or
governmental body restraining or prohibiting, and no other Legal Requirement (as
hereinafter defined) shall have come into effect making illegal, the performance
of this Agreement or the consummation of any of the transactions contemplated
hereby. As used herein, "LEGAL REQUIREMENT" shall include laws, regulations,
ordinances, orders, decrees, permits, licenses, consents, approvals,
registrations, memberships, authorizations and qualifications required by any
Authority.
(c) All consents, approvals, permits and authorizations
required to be obtained from, and all filings required to be made with, any
Authority and all material consents, approvals, permits and authorizations
required to be obtained from, and all filings required to be made with, any
Person in connection with the consummation of the transactions contemplated
hereby shall have been obtained or made, and all waiting periods specified under
applicable Legal Requirements, and all extensions thereof, the passing of which
is required for such consummation shall have passed. Without limiting the
foregoing, the Consent of TIAA under the Note Purchase Agreement shall have been
obtained.
40
45
(d) No proceeding shall have been instituted or consented to
by or against the Company or any subsidiary seeking to adjudicate any of them
bankrupt or insolvent, or seeking liquidation, winding up, reorganization or
other similar actions, or seeking the entry of an order to rely on the
appointment of a receiver, trustee or other similar official for it or any of
them and the Company shall not have taken any corporate action to authorize any
of the above.
(e) The Company shall have delivered a certificate or
certificates for the Shares in the name of AIG and such other instruments of
transfer or conveyance as are reasonably requested by AIG to vest in AIG or its
designee good, valid and marketable title to the Shares.
(f) All of the shares of Outstanding Stock shall have been
contributed to the Company.
(g) AIG shall have received an opinion of Cleary, Gottlieb,
Xxxxx & Xxxxxxxx, counsel for the Company, dated the Closing Date and addressed
to AIG, substantially in the form of Exhibit B hereto.
8.2. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND XX.
XXXXX. The obligations of the Company and Xx. Xxxxx to consummate the
transactions contemplated by this Agreement are subject to the fulfillment, at
or before the Closing Date , of the following conditions (subject to the right
of the Company or Xx. Xxxxx to waive any such condition as applied to it or
him):
41
46
(a) The representations and warranties of AIG contained in
this Agreement shall have been true and correct in all material respects as of
the date of this Agreement and shall be true and correct in all material
respects as of the Closing Date as if made on and as of the Closing Date (except
to the extent that any representation or warranty is made as of a specific date,
in which case such representation or warranty shall be true and correct as of
such specified date). AIG shall have performed in all material respects all of
its obligations under this Agreement to be performed at or prior to the Closing
Date and the Company and Xx. Xxxxx shall have received at the time of the
Closing a certificate from AIG reasonably satisfactory in form to the Company
and Xx. Xxxxx certifying to the satisfaction of the condition set forth in this
Section 8.2(a).
(b) No action, suit or proceeding shall have been instituted
or threatened which seeks to restrain, prohibit or declare illegal, or to obtain
a material amount of damages arising from the transactions contemplated by this
Agreement and no temporary restraining order or injunction shall have been
issued by any court or governmental body restraining or prohibiting, and no
Legal Requirement shall have come into effect making illegal, performance of
this Agreement or the consummation of any of the transactions contemplated
hereby.
(c) All consents, approvals, permits and authorizations
required to be obtained from, and all filings required to be made with, any
Authority and all material
42
47
consents, approvals, permits and authorizations required to be obtained from,
and all filings required to be made with, any Person in connection with the
consummation of the transactions contemplated hereby shall have been obtained or
made, and all waiting periods specified under applicable Legal Requirements, and
all extensions thereof, the passing of which is required for such consummation,
shall have been passed.
(d) All of the shares of Outstanding Stock and the cash and
notes described in Section 1.1 shall have been contributed to the Company.
IX. GENERAL PROVISIONS
9.1. PUBLIC DISCLOSURE AND CONFIDENTIALITY. Each party hereby
agrees that no press release or public announcement or communication will be
made or caused to be made concerning the execution or performance of this
Agreement or the terms hereof unless specifically approved in advance by both
parties.
9.2. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations and warranties contained herein or in any other
document or instrument delivered in connection herewith shall survive the
Closing.
Articles V, VI, VII and IX of this Agreement shall survive the
Closing without limitation as to time, except as specifically provided herein.
9.3. TERMINATION. (a) Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be
43
48
terminated and the transactions contemplated hereby abandoned at any time prior
to the Closing Date:
(i) By mutual written consent of the parties to
this Agreement;
(ii) By the Company or Xx. Xxxxx, if such party shall
have determined in good faith that one or more of the conditions set
forth in Section 8.2 cannot be fulfilled as a result of an occurrence
or event beyond the control of the Company and Xx. Xxxxx;
(iii) By AIG, if AIG shall have determined in
good faith that one or more of the conditions set forth in
Section 8.1 cannot be fulfilled as a result of an occurrence
or event beyond the control of AIG; or
(iv) By any party if the Closing shall not have
occurred by June 18, 1993 (other than as a result of a breach of this
Agreement by the party seeking termination).
(b) If this Agreement is terminated and the transactions
contemplated hereby are not consummated as provided above, this Agreement shall
become void and of no further force and effect, except for (i) any liability of
the breaching party for any willful breach of a covenant or agreement contained
in this Agreement causing or permitting such termination; and (ii) the
provisions of Section 7.6, which shall survive any such termination.
9.4. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if
44
49
delivered personally or sent by certified mail, telex or facsimile (and promptly
confirmed by certified mail, return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to the Company or to Xx. Xxxxx to:
Xxxxx Associates, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
(b) if to AIG to:
American International Group, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
American International Group, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
9.5. SPECIFIC PERFORMANCE. Because the remedy at law for any
breach of this Agreement that an aggrieved party has not otherwise waived would
be inadequate, the parties hereto hereby consent to the granting of an
injunction or other equitable relief, without the necessity of actual
45
50
monetary loss being proved, in order that any breach or threatened breach of
this Agreement be restrained.
9.6. FEES AND EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated and except as provided herein,
each of the parties to this Agreement shall bear its own expenses incurred in
connection with the negotiation, preparation, execution and Closing of this
Agreement and the transactions provided for hereby.
9.7. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding among the parties with respect to the Reorganization
and supersedes all prior discussions, agreements and undertakings, written or
oral, of any and every nature with respect thereto.
9.8. WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by authorized representatives of the
parties. No such written instrument shall be effective unless it expressly
recites that it is intended to amend, supersede, cancel, renew or extend this
Agreement or to waive compliance with one or more of the terms hereof, as the
case may be. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege, or any single or
partial exercise of any such right, power or privilege, preclude any further
exercise
46
51
thereof or the exercise of any other such right, power or privilege.
9.9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT, BY THE
LAWS OF THE STATE OF NEW YORK (EXCEPT TO THE EXTENT THAT THE LAWS OF THE STATE
OF DELAWARE NECESSARILY APPLY) (IN EACH CASE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW). The parties agree that any service of process to be made
hereunder may be made by certified mail, return receipt requested, addressed to
the party at the address appearing in Section 9.4 together with a copy to be
delivered to such party's attorneys as provided in Section 9.4.
9.10. BINDING EFFECT NO ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement is not assignable without the
prior written consent of each of the parties hereto or by operation of law.
9.11. COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts which together shall constitute one and
the same instrument.
9.12. FURTHER ASSURANCES. Each party shall, at the request of
the other party, at any time and from time to time following the Closing
promptly execute and deliver, or cause to be executed and delivered, to such
requesting party all such further instruments and take all such further action
as
47
52
may be reasonably necessary or appropriate to confirm or carry out the
provisions and intents of this Agreement and of the instruments delivered
pursuant to this Agreement.
9.13. CAPTIONS. All section titles or captions contained in
this Agreement or in any Exhibit or Schedule annexed hereto or referred to
herein, and the table of contents to this Agreement, are for convenience only,
shall not be deemed a part of this Agreement and shall not affect the meaning or
interpretation of this Agreement. All references herein to sections shall be
deemed references to such parts of this Agreement, unless the context shall
otherwise require.
9.14. CONSTRUCTION AND REPRESENTATION BY COUNSEL. The parties
hereto acknowledge and represent that in the negotiation and drafting of this
Agreement they have been represented by and relied upon the advice of counsel of
their choice. The parties hereto affirm that their counsel have had a
substantial role in the drafting and negotiation of this Agreement and,
therefore, the rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement or any exhibit or schedule attached hereto.
9.15. NO THIRD-PARTY BENEFICIARIES. It is understood and
agreed among the parties hereto that this Agreement and the representations,
warranties and covenants made herein are made expressly and solely for the
benefit of the other party hereto (or their respective successors or
48
53
permitted assigns), and that no other person shall be entitled or be deemed to
be a third-party beneficiary of any party's rights under this Agreement.
9.16. DEFINITIONS. The following terms shall have the
respective meanings specified in the indicated Sections of this Agreement:
Term Agreement Section
---- -----------------
Additional Issuance 6.3(a)
Affiliate 7.2
Agreement Recitals
Agreement Period 7.1
AIG Recitals
Associates Recitals
Authority 2.2
Board 6.2
Class A Common Stock Recitals
Closing 1.4(a)
Closing Date 1.4(a)
Commission 5.1(a)
Common Stock Recitals
Company Recitals
Condition 2.1
Encumbrance 1.2
Equity Securities 7.2(a)
Existing Stockholders Recitals
Exchange Act 5.4(a)
Financial Statements 2.8(a)
H/K Recitals
Indemnified Party 5.4(c)
Indemnifying Party 5.4(c)
Inspectors 5.4(e)
Kroll Group Recitals
Legal Requirement 8.1(b)
Member of the Kroll family 7.5
member of the Kroll Group Recitals
Note Purchase Agreement 2.4
Notes 1.1
Outstanding Stock Recitals
Xxxxxxx Recitals
Person 5.1(c)
Piggy-Back Registration 5.1(a)
Records 5.2(e)
Registrable Securities 5.1(a)
Reorganization Recitals
Restricted Stock Plan 2.5(b)
Returns 2.8(b)
49
54
Sale Ratio 7.5
Securities Act 3.7
Shares Recitals
Subsidiary 2.1
TIAA 2.4
Transfer Notice 7.4(d)
U.K. Recitals
Underwriter 5.1(a)
Voting Agreement Period 7.3
Voting Extension Date 7.3
50
55
IN WITNESS WHEREOF, the parties have duly executed this
Agreement, all as of the date first written above.
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------------
Title: Vice President
XXXXX X. XXXXX
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Xxxxx X. Xxxxx
KROLL HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Title:
56
SCHEDULE 1.2
Name Shares of Kroll Holdings, Inc.
-----------------------------------------------------------------------------------
Xxxxx X. Xxxxx 61,500
Xxxxxx X. XxXxxxx 3,272.5
Xxxxxx X. Xxxxxxx 2,310
Xxxxxx Xxxx 577.5
57
SCHEDULE 2.1
Kroll Asia
----------
Xxxxx Associates, Inc. owns a 50% interest in this joint venture with
Jardine, Xxxxxxxx & Co., Limited, Hong Kong Security Limited and Xxxxxxx Company
Limited.
Kroll France
------------
500 shares of capital stock outstanding. 499 shares held by Xxxxx
Associates U.K. Limited and 1 share held by Xxxxx X. Xxxxx.
58
EXHIBIT A
$2,999,990 New York, New York
June 15, 1993
For value received, AMERICAN INTERNATIONAL GROUP, INC., a
Delaware corporation ("AIG"), hereby promises to pay on the day six months
following the date hereof to KROLL HOLDINGS, INC., a Delaware corporation (the
"Company" ), in lawful money of the United States of America, the principal sum
of Two Million Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety Dollars
($2,999,990), together with interest on such principal sum from and including
the date hereof to but excluding the date of payment at the rate of 3 1/2% per
annum, for the actual number of days elapsed on the basis of a year consisting
of 360 days.
This Note is one of the Notes referred to in, and is subject
to and governed by, the Agreement. As used herein, the "Agreement" means the
Plan of Reorganization and Stockholders Agreement dated as of June 15, 1993 by
and among AIG, Xxxxx X. Xxxxx and the Company, as it may be supplemented,
amended or modified at any time from time to time in accordance with its
provisions.
Neither this Note nor any interest herein may be transferred
or assigned by the Company except with the prior written consent of AIG, and any
assignment or attempted assignment other than pursuant to the foregoing shall be
null and void.
AIG hereby waives all requirements as to diligence,
presentment, demand for payment, protest and notice of any kind with respect to
this Note; PROVIDED, however, that the Company shall forward this Note, marked
canceled, promptly following the Company's receipt of full payment hereunder.
Purchaser agrees that no extension of time for payment of this Note shall
release, discharge, modify, change or affect its liability under this Note.
This Note may be prepaid in whole or in part without penalty
upon two days' notice to the Company.
59
This Note shall be governed by and construed and interpreted
in accordance with the law, without regard to principles governing choice of
law, of the State of New York.
AMERICAN INTERNATIONAL GROUP, INC.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
2
60
EXHIBIT A
$2,000,000 New York, New York
June 15, 1993
For value received, AMERICAN INTERNATIONAL GROUP, INC., a
Delaware corporation ("AIG"), hereby promises to pay on the ninetieth day
following the date hereof to KROLL HOLDINGS, INC., a Delaware corporation ( the
"Company"), in lawful money of the United States of America, the principal sum
of Two Million Dollars ($2,000,000), together with interest on such principal
sum from and including the date hereof to but excluding the date of payment at
the rate of 3 1/4% per annum, for the actual number of days elapsed on the basis
of a year consisting of 360 days.
This Note is one of the Notes referred to in, and is subject
to and governed by, the Agreement. As used herein, the "Agreement" means the
Plan of Reorganization and Stockholders Agreement dated as of June 15, 1993 by
and among AIG, Xxxxx X. Xxxxx and the Company, as it may be supplemented,
amended or modified at any time from time to time in accordance with its
provisions.
Neither this Note nor any interest herein may be transferred
or assigned by the Company except with the prior written consent of AIG, and any
assignment or attempted assignment other than pursuant to the foregoing shall be
null and void.
AIG hereby waives all requirements as to diligence,
presentment, demand for payment, protest and notice of any kind with respect to
this Note; PROVIDED, however, that the Company shall forward this Note, marked
canceled, promptly following the Company's receipt of full payment hereunder.
AIG agrees that no extension of time for payment of this Note shall release,
discharge, modify, change or affect its liability under this Note.
This Note may be prepaid in whole or in part without penalty
upon two days' notice to the Company.
61
This Note shall be governed by and construed and interpreted
in accordance with the law, without regard to principles governing choice of
law, of the State of New York.
AMERICAN INTERNATIONAL GROUP, INC.
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
2
62
WAIVER AGREEMENT
This Waiver Agreement, dated as of November 8, 1994 (the "Waiver
Agreement"), is among American International Group, Inc. ("MG"), Xxxxx X. Xxxxx
("JBK") and Kroll Holdings, Inc. ("Kroll"). All capitalized terms used herein
without definition shall have the respective meanings ascribed to them in the
Stockholder Agreement (as defined below).
WHEREAS, MG became a stockholder of Kroll pursuant to the Plan of
Reorganization and Stockholder Agreement, dated June 15, 1993 (the "Stockholder
Agreement"), by and among MG, JBK and Kroll,
WHEREAS, Section 6.3 of the Stockholder Agreement contains certain
restrictions with respect to the issuance of additional Equity Securities by
Kroll, and
WHEREAS, Kroll wishes to obtain MG's waiver of Section 6.3 of the
Stockholder Agreement with respect to the issuance of 1,648 (one thousand six
hundred and forty eight) shares (the "Shares") of its Common Stock to Xxxxx X.
Xxxxxxx, Deputy Chairman of Kroll.
NOW THEREFORE, the parties hereto hereby agree as follows:
MG hereby agrees to waive Section 6.3 of the Stockholder
Agreement to the extent required with respect to the issuance
of the Shares.
IN WITNESS WHEREOF, the parties hereto have caused this Waiver
Agreement to be executed as of the day and year first written above and, in the
case of the corporate parties, on their behalf by a duly authorized officer.
AMERICAN INTERNATIONAL GROUP, INC.
By /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Title:
XXXXX ASSOCIATES, INC.
By /s/ Xxxxx Xxxxx
------------------------------
Title:
XXXXX X. XXXXX
By /s/ Xxxxx Xxxxx
------------------------------
