THIRD AMENDMENT AND SUPPLEMENT TO OPTION AGREEMENT
Exhibit 2.7
THIRD AMENDMENT AND SUPPLEMENT TO
OPTION AGREEMENT
OPTION AGREEMENT
This Third Amendment and Supplement to Option Agreement (this “Amendment”) is entered
into effective as of the 22 day of December, 2008 by and among Xx. Xxxxxxx Xxxxxx Xxxxxxx-Xxxxxxxx
(“Xx. Xxxxxxx”), a Mexican national, and Mrs. Xxxxx de Xxxxxxx Xxxxxx-Xxxx (“Xxx. Xxxxxx”), also a
Mexican national, both acting on their own behalf (Xx. Xxxxxxx and Xxx. Xxxxxx each, a “Grantor”
and, collectively, the “Grantors”), and The O’Gara Group, Inc. an Ohio corporation (“TOG”), herein
represented by its Chief Executive Officer, Xx. Xxxxxxx Xxxxx X’Xxxx.
WHEREAS, TOG and Grantors are parties to that certain Option Agreement, dated January 14,
2008, as amended by the Amendment and Supplement to Option Agreement, dated August 19, 2008, and
the Second Amendment and Supplement to Option Agreement dated December 8, 2008 the “Option
Agreement”); and
WHEREAS, the parties desire to amend and/or supplement certain provisions of the Option
Agreement;
NOW, THEREFORE, in consideration of the above, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree to amend and
supplement the Option Agreement as follows:
1. Section 1 of the Option Agreement shall be replaced in is entirety as follows:
“SECTION 1. GRANT OF OPTION
In consideration of the payment of US$2,000,000 made by TOG on or about January 14,
2008 (the “Initial Option Payment”), and of the payment of US$250,000 (the
“Additional Option Payment”) made by TOG on or about August 19, 2008, Grantors
hereby grant to TOG the right and option for TOG and any person to be designated by
TOG (which designee may acquire 5 or fewer shares) at the Closing (as defined in the
Purchase Agreement) to purchase all of the outstanding shares of the Company upon
the terms, conditions and covenants set forth in this Agreement (“Option”). Unless
TOG has exercised its rights and options under this Section 1, the term of this
option shall expire at 9:00 p.m. Eastern time on February 15, 2009 or on such
earlier date provided in writing by TOG (the “Expiration Date”). In the event that
any of the representations of Sellers as set forth in the Purchase Agreement (as
hereinafter defined) are not true and correct at the time that TOG exercises the
Option or at the time of Closing and prevent TOG from closing under the terms of the
Purchase Agreement, Sellers shall immediately return the Initial Option Payment and
the Additional Option Payment to TOG. Until such time as TOG exercises the Option
and closes the transaction in accordance with the Purchase Agreement, Grantors shall
continue to own the Company and this Agreement shall not constitute a transfer
of Shares or a sale of the Company. The Option granted hereunder may not be
assigned, in whole or in part, without the express prior written consent of
Grantors.”
2. Section 3 of the Option Agreement shall be replaced in its entirety as follows:
“SECTION 3. PURCHASE PRICE AND FORM OF PAYMENT.
A. In the event that TOG exercises the Option, the total purchase price
(“Purchase Price”) for the shares of the Company shall consist of:
(a) An initial payment (the “Initial Payment”) in the amount of
US$37,750,000; plus
(b) An additional payment (the “Second Payment”) equal to the amount that
the Company’s adjusted EBITDA (earnings before interest, taxes, depreciation
and amortization), subject to such adjustments in non-recurring changes and
other items consistent with the Company’s past practices, for the year ended
December 31, 2009 determined in accordance with Mexican GAAP exceeds
US$6,500,000 multiplied by 6.5, as determined by the audited financial
statements of the Company as of December 31, 2009;
B. The Initial Payment shall be payable at Closing (“Closing Payment”); and
C. The Second Payment, if applicable, shall be payable in cash within ten (10)
business days after the completion and delivery of the audited financial
statements of the Company as of December 31, 2009, but no later than March 31,
2010.
D. Five percent (5%) of the Closing Payment and Second Payment shall be payable
in common shares of TOG (“TOG Shares”) based on Market Price (as hereinafter
defined) of the TOG Shares at the time of issuance, provided that TOG has
completed its IPO prior to such payment date. For purposes hereof, “Market
Price” shall mean the IPO price for the Closing Payment and the average closing
price per share of the TOG Shares on the principal stock exchange on which the
TOG Shares are traded, during the five (5) trading days ending on the trading
day which is four (4) business days prior to the Second Payment date as reported
in The Wall Street Journal. In the event that the Company has not completed its
IPO prior to such payment date, the applicable payment shall be payable in cash.
The cash portion of the Initial Payment and the Second Payment shall be paid to
Grantors in immediately available funds by wire transfer to the account
designated by Grantors in United States.
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E. Taking into account that TOG and its Designee are non-residents in Mexico and
have no fixed place of business in Mexico, Grantors shall be solely responsible
for any taxes and tax obligations of the Grantors arising in Mexico and
elsewhere from the sale of the shares as provided by applicable laws and
regulations. Grantors expressly agree with TOG and its Designee to provide to
the Company, upon request, notarially certified copies of the tax returns and
other evidence of payment of said taxes, within fifteen (15) days following the
date(s) on which such taxes are due under applicable law.
F. In order to consummate the transactions contemplated by this Agreement and
the Purchase Agreement, TOG and Grantors shall enter into negotiations in good
faith to agree upon the most favorable tax structure that is agreeable to both
parties and is legal under US and Mexican law. If the parties shall fail to
reach agreement based on proposals put forward by Grantors, the cash portion of
the Purchase Price shall be increased by US$1,000,000.
G. Grantors and their professional advisors may review and participate in the
calculation and determination of the Company’s 2009 adjusted EBITDA.”
3. The duration of the Option as set forth in Section 7 of the Option Agreement is hereby
extended to and shall expire at 9:00 p.m. Eastern time on February 15, 2009.
4. The changes to Section 3 of the Option Agreement shall also be reflected in the Purchase
Agreement.
5. Capitalized terms used, but not otherwise defined herein, shall have the meanings assigned
to them in the Option Agreement.
6. Except as modified in this Amendment, the parties hereby affirm all provisions of the
Option Agreement and confirm that such Option Agreement is in full force and effect pursuant to the
terms therein.
IN WITNESS WHEREOF, the parties, intending to be additionally bound by the terms and
conditions stated herein, have executed this Amendment effective as of the date first set forth
above.
| “GRANTORS” | “TOG” | |||||
| The O’Gara Group, Inc. | ||||||
| “XX. XXXXXXX” | ||||||
By:
|
By: | |||||
| /s/ Xxxxxxx Xxxxxx Xxxxxxx-Xxxxxxxx | /s/ Xxxxxxx Xxxxx X’Xxxx | |||||
| Xx. Xxxxxxx Xxxxxx Xxxxxxx-Xxxxxxxx | Xx. Xxxxxxx Xxxxx X’Xxxx |
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| “XXX. XXXXXX” | ||||||
By: |
||||||
| /s/ Xxxxx de Xxxxxxx Xxxxxx-Xxxx | ||||||
| Mrs. Xxxxx xx Xxxxxxx Xxxxxx-Xxxx |
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