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Exhibit 10.28
STOCK OPTION AND STOCKHOLDERS' AGREEMENT
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STOCK OPTION AND STOCKHOLDERS' AGREEMENT, dated as of January 29, 1996,
among Kroll Holdings, Inc., a Delaware corporation (the "Company"), Xxxxx X.
Xxxxx, the Majority Stockholder (the "Majority Stockholder"), and Xxxxxxx X.
Xxxxxxxxx, an Executive of the Company (the "Executive"):
WHEREAS, the Company has determined to award the Executive options to
purchase 1098 shares of non-class A common stock ("Common Stock") of the Company
at $150.00 per share (the "Options"), subject to the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained the parties hereto hereby agree as
follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
(a) "Affiliate" shall mean with respect to any Person, a spouse of such
Person, any relative (by blood, adoption or marriage) of such Person, any
director, officer or employee of such Person, any trust formed by such Person,
any other Person of which such Person is a director, officer or employee, and
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person.
(b) "Appraiser" shall mean an accounting, investment banking or other
appraisal firm selected by the Board of Directors of the Company.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Call Date" shall have the meaning set forth in Section 3.8(b)
herein.
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(e) "Cause" shall mean (i) the commission of a felony; (ii) gross
negligence or willful misconduct in connection with the performance of the
Executive's duties as an Employee; (iii) a fraudulent act or omission by the
Executive adverse to the reputation of the Company or any of its Affiliates;
(iv) the disclosure by the Executive of any trade secrets or confidential
information of the Company or any of its Affiliates to persons not authorized to
know same; or (v) the willful refusal to carry out reasonable instructions of
the Chairman, which has a material adverse effect on the Company or any of its
Affiliates. If, subsequent to the Executive's voluntary termination of
Employment or involuntary termination of Employment without Cause, it is
discovered that the Executive's Employment could have been terminated for Cause,
the Executive's Employment shall, at the election of the Company, in its sole
discretion, be deemed to have been terminated for Cause.
(f) "Chairman" shall mean Xxxxx X. Xxxxx or a successor Chairman of the
Company or its Affiliates.
(g) "Commission" shall mean the U.S. Securities and Exchange
Commission.
(h) "Common Stock" shall mean the common stock of the Company,
excluding the class A common stock.
(i) "Company Notice" shall have the meaning set forth in Section 3.7
herein.
(j) "Company Stock" shall mean the common stock of the Company,
including both the class A common stock and the Common Stock.
(k) "Corporate Event" shall mean the date that (i) more than 50% of the
shares of Company Stock, by vote and by value, are owned by persons other than
the Majority Stockholder or employees or employee benefit plans of the Company
or its Affiliates, or (ii) all or substantially all of the assets of the Company
are sold to persons other than the Majority Stockholder or employees or employee
benefit plans of the Company or its Affiliates.
(l) "Disability" shall mean a permanent disability as defined in Kroll
Associates' long-term disability plan.
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(m) "Employment" shall mean employment with the Company or any
Affiliate. "Employee" and "Employed" shall have correlative meanings.
(n) "Fair Value" shall mean, as of any Valuation Date, the fair value
of a share of Common Stock, as determined by the Appraiser, and shall be equal
to the fair value of the Company as of such Valuation Date (determined in
accordance with the considerations listed below), divided by the sum of the
total number of shares of Company Stock issued and outstanding as of the
Valuation Date and the total number of options or any other instruments that
provide rights to acquire shares of Company Stock outstanding as of such
Valuation Date. The fair value of the Company shall be the price at which the
Common Stock would change hands between a willing buyer and a willing seller
when the former is not under any compulsion to buy and the latter is not under
any compulsion to sell, both parties having reasonable knowledge of relevant
facts. The determining the fair value of the Company, the Appraiser will
consider the financial condition and operating results and prospects of the
Company, including: balance sheet, historical and at the Valuation Date; assets;
liabilities; book value; historical operating results, particularly profits
generated and factors affecting profits; dividends paid historically and
dividend-paying capacity; budgets; plans and projections of future performance;
and prospects at the Valuation Date. Fair Value shall be determined by an
appraisal conducted as of each Valuation Date, and continuing for so long as
Fair Value shall be required to be determined under this Agreement. Such
appraisal shall be conducted following the release of the Company's audited
annual financial statements for the year ending on such Valuation Date. The
Company shall be responsible for the costs of such appraisal.
(o) "Grant Date" shall mean the Grant Date as defined in Section 2.2
herein.
(p) "Kroll Associates" shall mean Xxxxx Associates, Inc.
(q) "Majority Stockholder" shall mean Xxxxx X. Xxxxx and his family and
their respective donees, estates and heirs.
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(r) "Note Purchase Agreement" shall mean any long-term debt, credit or
other agreements or arrangements entered into by the Company or its Affiliates.
(s) "Options" shall mean the options to purchase Common Stock granted
to the Executive under this Agreement.
(t) "Permitted Disposition" shall have the meaning set forth in Section
3.2 herein.
(u) "Permitted Transferee" shall mean a Transferee who receives his
interest in Common Stock as the result of a Permitted Disposition, PROVIDED that
the Transferee becomes a party to this Agreement as provided in Section 3.1.
(v) "Person" shall mean an individual, a partnership, a joint venture,
a corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
(w) "Public Offering" shall mean an offer for sale of shares of Company
Stock pursuant to an effective registration statement filed by the Company which
issued such shares pursuant to the Securities Act.
(x) "Put Notice" shall have the meaning set forth in Section 3.6(b).
(y) "Securities Act" shall mean the Securities Act of 1933, as amended.
(z) "Selling Stockholder" shall have the meaning set forth in Section
3.7 herein.
(aa) "Stockholder Notice" shall have the meaning set forth in Section
3.7 herein.
(bb) "Transfer" shall mean any transfer, sale, assignment, gift,
testamentary transfer, pledge, hypothecation or other disposition of any
interest. "Transferee" and "Transferor" shall have correlative meanings.
(cc) "Trustee" shall mean a trustee chosen by the Executive and
consented to by the Majority Stockholder, such consent not to be unreasonably
withheld.
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(dd) "Valuation Date" shall mean December 31 of each year, commencing
with December 31, 1995.
(ee) "Vesting Date" shall mean the date the Options become exercisable
as defined in Section 2.3 herein.
2. OPTIONS
The Company hereby grants to the Executive Options to purchase 1098
shares of Common Stock of the Company at $150.00 per share, subject to the
following terms and conditions:
2.1 IDENTIFICATION OF OPTIONS. The Options granted under this Agreement
shall be non-qualified stock options which are not entitled to tax treatment as
incentive stock options under Section 422 of the Internal Revenue Code of 1986.
2.2 GRANT DATE. The Grant Date of the Options shall be the date this
Agreement is executed.
2.3 VESTING DATE OF OPTIONS. Fifty percent of the Options granted
pursuant to this Agreement are immediately exercisable on the Grant Date and the
remaining fifty percent of the Options shall become exercisable on the earliest
to occur of: (a) June 30,1997; (b) the date of a Corporate Event; or (c) the
date the Executive's Employment ceases due to (i) Disability, (ii) death, or
(iii) termination by the Company other than for Cause.
2.4 EXPIRATION OF OPTIONS. The Options shall expire on the third
anniversary of the Grant Date defined above, or, if a Corporate Event has
occurred before the third anniversary, on the 10th anniversary of such Grant
Date.
2.5 TERMINATION OF EMPLOYMENT. The Options may only be exercised while
the Executive is Employed and, in the event the Executive's Employment ceases
due to the Executive's Disability, death, termination of Employment at or after
age 65 other than for Cause or termination of Employment by the Company other
than for Cause, for a period of 90
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days after the date of such cessation or termination. In the event the Executive
voluntarily terminates his Employment before age 65, all Options, whether vested
or unvested, shall expire as of the date of such termination.
2.6 TERMINATION FOR CAUSE. In the event the Executive's Employment is
or is deemed to have been terminated by the Company for Cause, all Options,
whether vested or unvested, shall expire at the commencement of business as of
the date of such termination.
2.7 LIMITATION ON TRANSFER. During the lifetime of the Executive, the
Options shall be exercisable only by him. No Option shall be assignable or
transferable otherwise than by will or by the laws of descent and distribution.
2.8 EXERCISE OF OPTIONS. The Options shall be exercisable in whole or
in part; provided, that no partial exercise of the Options shall be for an
aggregate exercise price of less than $1000. The partial exercise of the
Options, alone, shall not cause the expiration, termination or cancellation of
the remaining Options.
2.9 EXERCISE OF OPTIONS BY BENEFICIARY(IES). Before any beneficiary or
beneficiaries of the Executive may exercise the Options granted herein upon the
Executive's death, such beneficiary or beneficiaries must agree to be bound by
this Agreement, including, without limitation, the restrictions on Common Stock
provided in Section 3 herein, as if they had been original signatories hereto.
2.10 METHOD OF EXERCISE. The Options shall be exercised by delivery of
written notice to the Company's principal office, to the attention of its
Secretary, no less than one business day in advance of the effective date of the
proposed exercise. Such notice shall (a) specify the number of shares of Common
Stock with respect to which the Options are being exercised, the effective date
of the proposed exercise and any request with respect to withholding taxes
pursuant to Section 2.13, (b) be signed by the Executive or his
beneficiary(ies), as the case may be, and (c) if the Options are being exercised
by the Executive's beneficiary(ies), such beneficiary or beneficiaries shall
indicate in writing that they agree to and shall be bound by this Agreement as
if they had been original signatories hereto.
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2.11 CERTIFICATES OF SHARES. Upon the exercise of the Options,
certificates of shares of Common Stock, legended as provided in Section 3.4,
shall be issued in the name of the Executive or his beneficiary(ies), as the
case may be, and delivered to the Executive or his beneficiary(ies), as the case
may be, as soon as practicable following the effective date on which the Options
are exercised.
2.12 COMPLIANCE WITH APPLICABLE LAW. Notwithstanding anything herein to
the contrary, the Company shall not be required to issue or deliver any
certificates evidencing shares of Common Stock pursuant to the exercise of any
Options, unless and until the Company has determined, with advice of counsel,
that the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authorities and, if applicable, the
requirements of any exchange on which the shares of Common Stock are listed or
traded. The Company shall in no event be obligated to register such shares of
Common Stock or to take any other action in order to comply with any such law,
regulation or requirement with respect to the issuance and delivery of such
certificates. In addition to the terms and conditions provided herein, the
Company may require that a Participant make such covenants, agreements and
representations as the Company, in its sole discretion, deems necessary in order
to comply with any such laws, regulations or requirements.
2.13 WITHHOLDING TAXES. At the time that the Executive exercises all or
part of his Options, the Executive may notify the Company and request, in
writing, that the Company withhold a portion of the shares that are to be
distributed to the Executive to satisfy the applicable federal, state and local
withholding taxes incurred in connection with the exercise of the Options.
Otherwise, the Executive must pay to the Company in cash an amount sufficient to
satisfy such withholding taxes.
2.14 ADMINISTRATION OF OPTIONS.
(a) TERMINATION OF THE OPTIONS. The Board may, at any time, in its
absolute discretion, without amendment to this Agreement, terminate the Options
then outstanding, whether or not exercisable, provided, however, that the
Company, in full consideration of such termination, pays to the Executive an
amount in cash for each such Option equal to either (i) if
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the date of termination occurs prior to a Public Offering, the excess of (x) the
Fair Value of the shares of Common Stock subject to the Options as of the
Valuation Date either (1) immediately preceding the date of termination if such
date is on or before June 30, or (2) immediately succeeding the date of
termination if such date is after June 30 but before January 1 of the following
calendar year, over (y) the exercise price of the Options, or (ii) if the date
of termination occurs coincident with or following a Public Offering, the excess
of (x) the fair market value of each share of Common Stock as of the date of
termination over (y) the exercise price of the Options.
(b) AMENDMENT OF TERMS OF OPTIONS. The Board may, in its absolute
discretion, amend the terms of the Options, provided, however, that any such
amendment shall not impair the Executive's rights under such Options without the
Executive's consent.
2.15 ADJUSTMENT UPON CHANGES IN COMPANY STOCK.
(a) INCREASE OR DECREASE IN ISSUED SHARES WITHOUT CONSIDERATION.
Subject to any required action by the stockholders of the Company, in the event
of any increase or decrease in the number of issued shares of Company Stock
resulting from a subdivision or consolidation of shares of Company Stock or the
payment of a stock dividend (but only on the shares of Company Stock), or any
other increase or decrease in the number of such shares effected without receipt
of consideration by the Company, the Board shall proportionally adjust the
number of shares of Common Stock subject to the Options and the exercise price
per share of Common Stock of each such Option.
(b) CERTAIN MERGERS. Subject to any required action by the stockholders
of the Company, in the event that the Company shall be the surviving corporation
in any merger or consolidation (except a merger or consolidation as a result of
which the holders of shares of Common Stock receive securities of another
corporation), the Options outstanding on the date of such merger or
consolidation shall pertain to and apply to the securities which a holder of the
number of shares of Common Stock subject to such Options would have received in
such merger or consolidation.
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(c) CERTAIN OTHER TRANSACTIONS. In the event of (i) a dissolution or
liquidation of the Company, (ii) a sale of all or substantially all of the
Company's assets, (iii) a merger or consolidation involving the Company in which
the Company is not the surviving corporation or (iv) a merger or consolidation
involving the Company in which the Company is the surviving corporation but the
holders of shares of Company Stock receive securities of another corporation
and/or other property, including cash, the Board shall, in its absolute
discretion, have the power to:
(A) cancel, effective immediately prior to the occurrence of
such event, the Options outstanding immediately prior to such event
(whether or not then exercisable), and, in full consideration of such
cancellation, pay to the Executive an amount in cash, for each share of
Common Stock subject to the Options, equal to the excess of (1) the
value, as determined by the Board in its absolute discretion, of the
property (including cash) received by the holder of a share of Common
Stock as a result of such event over (2) the exercise price of the
Options; or
(B) provide for the exchange of each Option outstanding
immediately prior to such event (whether or not then exercisable) for
an option on or stock appreciation right with respect to, as
appropriate, some or all of the property for which such Options are
exchanged and, incident thereto, make an equitable adjustment, as
determined by the Board in its absolute discretion, in the exercise
price of the options or stock appreciation rights, or the number of
shares or amount of property subject to the options or stock
appreciation rights or, if appropriate, provide for a cash payment to
the Executive in partial consideration for the exchange of the Options.
(d) OTHER CHANGES. In the event of any change in the capitalization of
the Company or a corporate change other than those specifically referred to in
Sections 2.15(a), (b) or (c) hereof, the Board may, in its absolute discretion,
make such adjustments in the number and class of shares subject to Options
outstanding on the date on which such change occurs and in the per-share
exercise price of each such Option as the Board may consider appropriate to
prevent dilution or enlargement of rights.
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(e) NO OTHER RIGHTS. Except as expressly provided in this Agreement,
the Executive shall not have any rights by reason of any subdivision or
consolidation of shares of Common Stock or shares of stock of any class, the
payment of any dividend, any increase or decrease in the number of shares of
Common Stock or shares of stock of any class or any dissolution, liquidation,
merger or consolidation of the Company or any other corporation. Except as
expressly provided in this Agreement, no issuance by the Company of shares of
Common Stock or shares of stock of any class, or securities convertible into
shares of Common Stock or shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Common Stock subject to the Options or the exercise price of the Options.
2.16 RIGHTS AS A STOCKHOLDER. The Executive shall not have any rights
as a stockholder with respect to any shares of Common Stock covered by or
relating to the Options granted pursuant to this Agreement until the date the
Executive becomes the registered owner of such shares. Except as otherwise
expressly provided in Sections 2.14 and 2.15 hereof, no adjustment to the
Options shall be made for dividends or other rights for which the record date
occurs prior to the date such stock certificate is issued.
2.17 NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in this Agreement
shall confer upon the Executive any right with respect to the continuation of
his Employment or interfere in any way with the right of the Company or an
Affiliate, subject to the terms of any separate Employment agreement to the
contrary, at any time to terminate such Employment or to increase or decrease
the compensation of the Executive from the rate in existence at the time of the
grant of the Options.
2.18 NO OBLIGATION TO EXERCISE. The grant to the Executive of the
Options shall impose no obligation upon the Executive to exercise such Options.
3. RESTRICTIONS ON COMMON STOCK
Upon the exercise of the Options provided in Section 2 above, the
rights and obligations of the Executive and his Permitted Transferees with
respect to Common Stock
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obtained through the exercise of the Options provided under this Agreement shall
be governed by the following terms and conditions.
3.1 LIMITATION ON TRANSFER OF COMMON STOCK. The Executive shall not
Transfer any shares of Common Stock except as provided in this Agreement. It
shall be a condition precedent to any Transfer of shares of Common Stock by the
Executive (')ut excluding Transfers referred to in Section 3.5 (Public
Offerings) hereof) that the Transferee, if not already a party to this
Agreement, shall agree prior to the Transfer in writing with the Company and the
other parties hereto to be bound by the terms of this Agreement as if it had
been an original signatory hereto.
3.2 PERMITTED DISPOSITION. The Executive shall be entitled to Transfer
shares of Common Stock, at any time and from time to time, (a) if such Transfer
is a testamentary transfer effected by operation of law or by will, (b) to a
trust for the benefit of the Executive or the Executive's spouse, issue or
siblings, or (c) pursuant to and in accordance with sections 3.5 (Public
Offering), 3.6 (Puts), 3.7 (Right of First Refusal), 3.8 (Calls), 3.9
(Tag-Alongs) and 3.10 (Drag-Alongs).
3.3 EFFECT OF VOID TRANSFERS. In the event of any purported Transfer of
any shares of Common Stock in violation of the provisions of this Agreement,
such purported Transfer shall, to the extent permitted by applicable law, be
void and of no effect, and, until such time as a Transfer in compliance with
this Agreement shall have occurred, (a) no dividend of any kind whatsoever nor
any distribution pursuant to liquidation or otherwise shall be paid to the
purported Transferee in respect of such shares, (b) the voting rights of such
shares, if any, on any matter whatsoever shall remain vested in the Transferor,
(c) the Transferor shall continue to be bound with respect to its obligations
hereunder as the holder of such shares and (d) no such purported Transfer in
violation of this Agreement shall be registered by the Company on its books of
registry.
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3.4 SECURITIES ACT; LEGENDS ON STOCK; NOTICE OF TRANSFER.
(a) LEGENDS ON STOCK. Upon the exercise of the Options, each stock
certificate representing shares of Common Stock (prior to a Public Offering
pursuant to Section 3.5) shall bear a legend in substantially the following
form:
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 and may not be transferred
in the absence of such registration or any exception therefrom under
such Act or under such state securities or blue sky laws.
The shares represented by this certificate may not be sold,
assigned, transferred, exchanged, mortgaged, pledged or otherwise
disposed of or encumbered except in compliance with the provisions of
that certain Stock Option and Stockholders' Agreement, dated as of
January 29, 1996, as it may be amended, among Kroll Holdings, Inc.,
Xxxxx X. Xxxxx, and Xxxxxxx X. Xxxxxxxxx. A copy of such Stock Option
and Stockholders' Agreement, and any amendments thereto, is on file and
available for inspection at the principal offices of Xxxxx Holdings,
Inc.
(b) NOTICE OF TRANSFER. Prior to any Transfer of shares of Common Stock
by the Executive or his Permitted Transferees, the Executive or his Permitted
Transferees will give written notice to the Company of his intention to effect
such Transfer. The following provisions shall then apply:
(i) If in the opinion of the Company's counsel the proposed
Transfer may be effected without registration of such shares under the
Securities Act, the Company shall, as promptly as practicable, so
notify the Executive and he shall thereupon be entitled, subject to the
other provisions of this Agreement, to Transfer such shares in
accordance with the terms of the notice delivered by him to the
Company.
(ii) If such counsel is unable to conclude that the proposed
Transfer may be effected without registration of such shares under the
Securities Act, the Company will, as promptly as practicable, so notify
the Executive and thereafter he shall not be entitled to Transfer such
shares until either such shares have been effectively registered
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under the Securities Act or the provisions of this subdivision (b) of
this Section 3.4 have otherwise been complied with, it being understood
that the Company will not be requested or required to register such
shares of Common Stock.
3.5 PUBLIC OFFERING. In the event of a Public Offering, the Executive
shall be entitled, without the consent of any other Stockholder, to Transfer any
or all of his shares of Common Stock, at any time and from time to time
following such Public Offering. The Company has not made any commitment to
effect a Public Offering of its shares or otherwise register such shares for
resale.
3.6 EXECUTIVE'S RIGHT TO PUT SHARES TO THE COMPANY
(a) PUT RIGHTS. The Executive or his Permitted Transferees shall have
the right to sell to the Company, and the Company shall have the obligation to
purchase from the Executive or his Permitted Transferees, the shares of Common
Stock obtained as a result of exercising the Options in accordance with the
terms of this Section 3.6.
(b) PUT NOTICE. No more than once each twelve-month period, the
Executive or his Permitted Transferees may elect to sell their shares of Common
Stock to the Company by delivering written notice (the "Put Notice") to the
Company specifying the number of shares of Common Stock such Executive or his
Permitted Transferees wish to sell to the Company.
(c) NUMBER OF SHARES. The Executive and his Permitted Transferees shall
have the right to sell to the Company, and the Company shall be obligated to
purchase, in any calendar year, no more than 13 of the total number of shares
of Common Stock that the Executive obtained as a result of exercising the
Options granted hereunder.
(d) PAYMENT FOR SHARES. Following receipt of the Put Notice pursuant to
this Section 3.6, the Company shall tender to the Executive or Permitted
Transferee a certified check in an amount equal to the product of the number of
shares of Common Stock being sold and the Fair Value of a share of Common Stock.
The Fair Value shall be determined as of the Valuation Date either (i)
immediately preceding the date the Company received the Put Notice if such date
is on or before June 30, or (ii) immediately succeeding the date the Company
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received the Put Notice if such date is after June 30 but before January 1 of
the following calendar year. The Company may delay such payment for a reasonable
time pending the availability of the necessary financial information and the
calculation of Fair Value by the Appraiser. Regardless of whether payment has
been delayed by the Company pursuant to this Section 3.6, the Executive or
Permitted Transferee shall deliver to the Company stock certificates for such
shares of Common Stock, duly endorsed in blank as soon as practicable after
delivery of the Put Notice.
(e) RESTRICTION ON RIGHT TO PUT. The Company shall not be obligated to
purchase shares of Common Stock from the Executive or Permitted Transferee if,
at the time payment for such shares of Common Stock would be required to be
made, (i) such payment would result in a breach of, or could constitute an event
of default under, any Note Purchase Agreement; (ii) an event of default of any
Note Purchase Agreement has occurred and is continuing; or (iii) such payment
would violate applicable law.
(f) EXPIRATION OF PUT RIGHTS. The Put Rights shall expire on the date
that a Public Offering of Company Stock occurs.
3.7 EXECUTIVE RIGHT TO TRANSFER AND COMPANY RIGHT OF FIRST REFUSAL.
Following the fifth anniversary of the date of this Agreement and prior to a
Public Offering, the Executive and his Permitted Transferees shall have the
right (subject to the other terms of this Agreement) to Transfer any shares of
Common Stock held by such holder(s) in accordance with the terms of this Section
3.7. In the event that such holder(s) obtains from an independent purchaser a
good xxxxx XXXX FIDE offer to purchase shares of Common Stock held by such
holder, he shall promptly notify the Company in writing of the name and address
of such independent purchaser and inform the Company of the status of such
negotiations. When and if such holder (a "Selling Stockholder") decides to
Transfer any such shares of Common Stock, such Selling Stockholder shall
promptly deliver to the Company a copy of such good xxxxx XXXX FIDE offer along
with the identity of the independent purchaser and a written notice that, unless
the Company exercises its rights granted in this Section 3.7, such Selling
Stockholder will Transfer his shares of Common Stock in accordance therewith
(the
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"Stockholder Notice"). At any time during the ten business days following
receipt of the Stockholder Notice, the Company may give such Selling Stockholder
notice of exercise of its right to purchase all, but not less than all, of the
shares of Common Stock which the Selling Stockholder has given notice of his
intention to Transfer in the Stockholder Notice (the "Company Notice"). Upon
receipt of the Company Notice, the Selling Stockholder shall sell the shares of
Common Stock described in the Stockholder Notice to the Company at a price equal
to the product of the number of shares of Common Stock being sold and the Fair
Value of a share of Common Stock as of the Valuation Date either (i) immediately
preceding the date of the Company Notice if such date is on or before June 30,
or (ii) immediately succeeding the date of the Company Notice if such date is
after June 30 but before January 1 of the following calendar year. The Company
may delay such payment for a reasonable time pending the availability of the
necessary financial information and the calculation of Fair Value by the
Appraiser. Regardless of whether the Company delays such payment pursuant to
this Section 3.7, if the Company exercises its right of first refusal under this
Section 3.7, the Executive or Permitted Transferee shall deliver to the Company
stock certificates for such shares of Common Stock, duly endorsed in blank, as
soon as practicable after receipt of the Company Notice. If the Selling
Stockholder shall not receive the Company Notice as provided in the foregoing
sentence, he shall have the right to Transfer all, but not less than all, of the
shares of Common Stock offered for Transfer in the Stockholder Notice to the
independent purchaser specified in the Stockholder Notice, for the consideration
and in accordance with the terms and conditions set out in such Stockholder
Notice and in compliance with the terms of this Agreement, PROVIDED that such
Selling Stockholder shall not Transfer any shares of Common Stock to (i) any
Person, or Affiliate of such Person, who competes, or is expected to compete,
with the Company or any of its Affiliates, (ii) any Person, or Affiliate of such
Person, who the Company determines (in its sole discretion) might cause harm to
the Company by virtue of becoming a stockholder of the Company, (iii) any bank
or other financial institution for the purpose of pledging or granting a
security interest in such shares of Common Stock in order to secure indebtedness
of such Selling Stockholder, or (iv) any other shareholder of the Company
without the written consent of the Majority Stockholder, or (v) any Person, or
Affiliate of such Person, which has a material adverse interest to, or is
involved in a pending or threatened
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litigation or legal proceeding with, the Company, the Majority Stockholder or
any of their Affiliates.
3.8 COMPANY CALL RIGHTS
(a) In the event that the Executive ceases to be Employed for any
reason other than (1) death, (2) Disability, or (3) termination at or after age
65 (other than a termination by the Company for Cause), the Company shall have
the right to purchase from such Executive and all of his Permitted Transferees,
and such Executive and all of his Permitted Transferees shall have the
obligation to sell to the Company, all (but not less than all) of such
Executive's and/or his Permitted Transferee's shares of Common Stock at a price
equal to the product of (i) the number of shares of Common Stock being purchased
and (ii) the Fair Value of a share of Common Stock as of the Valuation Date
either (x) immediately preceding the Call Date if such Call Date is on or before
June 30, or (y) immediately succeeding the Call Date if such Call Date is after
June 30 but before January 1 of the following calendar year. The Company may
delay such payment for a reasonable time pending the availability of the
necessary financial information and the calculation of Fair Value by the
Appraiser. Regardless of whether the Company delays such payment pursuant to
this Section 3.8, the Executive or Permitted Transferee shall deliver to the
Company stock certificates for such shares of Common Stock, duly endorsed in
blank, as soon as practicable following the Call Date.
(b) The Company's right to purchase shares of Common Stock shall be
exercised by the delivery of a written notice to the Executive or his Permitted
Transferees, specifying the "Call Date," which date shall be not less than one
and no more than ninety days after the date of such notice, on which the Company
shall purchase all but not less than all) of such shares of Common Stock held by
the Executive and/or his Permitted Transferees.
(c) The Call Rights shall expire on the date that a Public Offering of
Company Stock occurs.
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3.9 EXECUTIVE'S TAG-ALONG RIGHTS.
(a) In the event of a Public Offering or a sale of all or substantially
all of the stock of the Company, the Executive or his Permitted Transferee will
be permitted to participate in such transaction by selling the number of shares
of Common Stock owned by the Executive and all of his Permitted Transferees as a
result of exercising the Options provided herein equal to the product of the
number of shares of Common Stock owned by the Executive and all of his Permitted
Transferees and a fraction, the numerator of which is the total number of shares
of Common Stock proposed to be sold by the Majority Stockholder (before giving
effect to this provision) and the denominator of which is the total number of
shares of Common Stock then owned by the Majority Stockholder and his Permitted
Transferees plus the total number of shares of Common Stock owned on or before
the fifth business day prior to the date of such Public Offering or sale, by any
other Stockholder of the Company entitled to participate in such sale. The
Company shall notify the Executive in writing of such Public Offering or sale,
indicating the price and other material terms and conditions of the proposed
sale and the intended closing date of such sale. Any purchase from the Executive
under this Section 3.9 shall be at the same price per share of Common Stock and
on the same terms and conditions as apply to the purchase from the Majority
Stockholder. The Executive shall give the Company written notice of how many
shares of Common Stock he and all of his Permitted Transferees desire to sell
within 10 days of receiving notice of the proposed transaction. If the Company
does not receive notice from the Executive or his Permitted Transferees within
such ten-day period, the Executive and/or his Permitted Transferees shall be
deemed to have elected not to exercise the rights under this Section 3.9 and the
Company may complete the proposed Public Offering or sale at the price and on
the terms and conditions of the notice to the Executive.
(b) The Company shall have the right, but not the obligation, to
satisfy the Executive's Tag-Along Rights by redeeming the number of shares of
Common Stock the Executive is entitled to sell under this Section 3.9 in lieu of
allowing the Executive to participate in the sales transaction. On the date
specified by the Company in a written notice to the Executive for such
redemption, the Company shall tender to the Executive or Permitted Transferee a
certified check in the amount equal to the product of the number of shares of
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Common Stock being redeemed and the price per share of Common Stock being paid
in the sales transaction and the Executive or Permitted Transferee shall deliver
to the Company stock certificates for such shares of Common Stock, duly endorsed
in blank.
3.10 MAJORITY STOCKHOLDER'S DRAG-ALONG RIGHTS. In the event that the
Majority Stockholder or any of his Permitted Transferees agree to sell all or
substantially all of their shares of Company Stock, the Majority Stockholder
shall have the right, but not the obligation, to require the Executive and all
of his Permitted Transferees to sell, and the Executive and all of his Permitted
Transferees shall have the obligation to sell, under the same terms and
conditions that are applicable to the sale by the Majority Stockholder and at
the same time as such sale, up to that total number of shares of Common Stock
owned by the Executive and all of his Permitted Transferees obtained by
multiplying (a) the total number of shares of Common Stock that are proposed to
be sold before giving effect to this provision) by the Majority Stockholder and
all of his Permitted Transferees, by (b) a fraction, the numerator of which is
the total number of shares of Common Stock owned on or before the fifth business
day prior to the date of such sale by the Executive and all of his permitted
Transferees and the denominator of which is the total number of shares of Common
Stock owned by the Majority Stockholder and all of his Permitted Transferees.
4. CERTAIN VOTING AGREEMENTS
4.1 OBLIGATION TO BE COUNTED FOR A QUORUM. Once the Options are
exercised, the Executive and all of his Permitted Transferees agree to be
present in person or represented by proxy at all meetings of the stockholders of
the Company, so that all shares owned by the Executive or his Permitted
Transferees may be counted for the purpose of determining the presence of a
quorum at such meetings.
4.2 VOTING BY STOCKHOLDERS. Once the Options are exercised, the
Executive agrees to vote any shares of Common Stock owned by him, and to cause
all of his Permitted Transferees to vote any shares of Common Stock owned by
such Permitted Transferees, whether by note, ballot, proxy or written consent,
in any vote of the stockholders of the Company in the same manner as the
Majority Stockholder, or upon the death of the Majority
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Stockholder, in the same manner as the holders of a majority of the shares held
by the Permitted Transferees of the Majority Stockholder.
5. MISCELLANEOUS
5.1 INTERPRETATION OF THIS AGREEMENT. The Board shall have full
authority to interpret and construe any provision of this Agreement, including,
without limitation, the terms of the Options provided hereto and the terms and
restrictions on shares of Common Stock obtained as a result of the exercise of
such Options, and to adopt such rules and regulations for administering such
provisions as it may deem necessary or appropriate. Decisions of the Board shall
be final and binding on all parties.
5.2 AMENDMENTS. This Agreement may be amended only by a written
instrument signed by all of the parties hereto, except with respect of the
Options as provided in Section 2.
5.3 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party hereto upon any breach or default of any
party under this Agreement, shall impair any such right, power or remedy of such
party nor shall it be construed to be a waiver of any such breach or default, or
an acquiescence therein, or of or in any similar breach or default thereafter
occurring nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, shall be in
writing and shall be effective only to the extent specifically set forth in such
writing.
5.4 INTEGRATION. This Agreement and the documents referred to herein or
delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
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5.5 OTHER STOCKHOLDERS' AGREEMENTS. The Executive or his respective
Permitted Transferees shall not enter into any stockholder agreement or
arrangement of any kind with any person with respect to the shares of Common
Stock received pursuant to the Options provided herein inconsistent with the
provisions of this Agreement (whether or not such agreement or arrangement is
with other stockholders that are not parties to this Agreement).
5.6 SUCCESSORS, ASSIGNS AND TRANSFEREES. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and each of
their respective successors, assigns and Transferees, PROVIDED that the
Executive may not assign to any Person any of his rights hereunder other than in
connection with a Transfer to such Person of shares in accordance with the
provisions hereof.
5.7 NOTICES. All notices and other communications hereunder shall be in
writing and shall be given and shall be deemed to have been duly given if
delivered in person, by cable, telegram, telex or facsimile transmission, to the
parties as follows:
If to the Executive:
To the address shown on the attached signature page.
If to the Majority Stockholder:
Xxxxx Associates, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
ATTENTION: Xxxxx X. Xxxxx
If to the Company:
Kroll Holdings, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 100224751
ATTENTION: General Counsel and Secretary
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall only be
effective upon receipt.
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5.8 DESCRIPTIVE HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of the terms contained herein.
5.9 SEVERABILITY. In the event that any one or more of the provisions,
subdivisions, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, subdivision, word, clause, phrase or
sentence in every other respect and of the remaining provisions, subdivisions,
words, clauses, phrases or sentences hereof shall not be in any way impaired, it
being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
5.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
5.11 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without
regard to the provisions governing conflict of laws.
5.12 INJUNCTIVE RELIEF. The Executive acknowledges and agrees that a
violation of any of the terms of this Agreement will cause the Company
irreparable injury for which adequate remedy at law is not available. Therefore,
the Executive agrees that the Company shall be entitled to an injunction,
restraining order or other equitable relief from any court of competent
jurisdiction, restraining the Executive and/or any of his Permitted Transferees
from committing any violations of the provisions of this Agreement.
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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement
or caused this Agreement to be executed on its behalf as of the date first
written above.
KROLL HOLDINGS, INC.
By: /s/ Xxxxxx X.
-----------------------------
Title:
MAJORITY STOCKHOLDER:
/s/ Xxxxx X. Xxxxx
--------------------------------
Xxxxx X. Xxxxx
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Address:
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