Exhibit 10.3
TERMINATION, AMENDMENT AND CONSENT AGREEMENT
This Termination, Amendment and Consent Agreement (this "Agreement") is
made and entered into this 4th day of September, 2002 between Xxxxx Inc., a
Delaware corporation ("Kroll"), and Palisade Concentrated Equity Partnership,
L.P. ("Palisade") and Palisade, as Collateral Agent under the Security Agreement
(as defined below)(in such capacity, the "Collateral Agent").
WHEREAS, Kroll, Palisade and Pegasus Partners II, L.P. are parties to
the Securities Purchase Agreement, dated November 14, 2001 (the "Purchase
Agreement"), the Security Agreement, dated as of November 14, 2001 (the
"Security Agreement"), and the Pledge Agreement, dated as of November 14, 2001
(the "Pledge Agreement"), and Palisade is the holder of Notes;
WHEREAS, the parties desire to set forth certain agreements between
themselves in relation to the Purchase Agreement, the Security Agreement, the
Pledge Agreement, the Notes and other matters; and
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in the Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Termination of Security Agreement and Pledge Agreement. The parties hereby
acknowledge and agree that each of the Security Agreement and Pledge Agreement
is terminated and of no force or effect, and, unless otherwise expressly
provided in this Agreement, the parties thereto shall have no further rights,
responsibilities, liabilities or obligations thereunder.
2. Release of Security Interest. Palisade in its individual capacity and as
Collateral Agent hereby unconditionally and irrevocably releases entirely the
security interest in and all rights, interests and liens with respect to (i) the
Collateral (as defined in the Security Agreement) and (ii) the Pledged
Collateral (as defined in the Pledge Agreement). Palisade further agrees
promptly to take any actions and to execute and deliver or authorize the filing
of any further documents necessary or reasonably requested by Kroll to
effectuate or evidence such release, including, but not limited to, the return
to Kroll of any Collateral and Pledged Collateral being held by Palisade and the
execution and delivery of or the authorization to file those documents necessary
under Article 9 of the Uniform Commercial Code or other applicable law to
effectuate and/or provide public notice of such release. Kroll will pay all
filing fees with respect to any additional documentation reasonably requested by
Kroll to effectuate the release granted herein.
3. Consent. Palisade hereby consents to the creation by Kroll of any additional
indebtedness, liability for borrowed money or any guarantee of any thereof by
Kroll or any subsidiary that is senior to or parri passu with the Notes.
Palisade hereby acknowledges and agrees that the creation of any such
indebtedness, liability for borrowed money or any guarantee of any thereof by
Kroll or any subsidiary shall not be, or be deemed to be, a breach of any
provision of the Purchase Agreement or the Notes.
4. Amendment to the Purchase Agreement. (a) The parties hereby agree that the
following provisions of the Purchase Agreement are hereby deleted in their
entirety: Sections 6.1, 6.2, 6.9, 6.11, 6.16 and 6.17. All references in the
Purchase Agreement to the sections deleted pursuant to this Section 4 are hereby
deleted.
(b) The second "Whereas" clause of the Purchase Agreement is hereby
amended by deleting the word "Secured" in the definition of "Notes" and any
reference in the Purchase Agreement or this Agreement to the word "Notes" shall
be to such revised definition.
(c) Except as expressly amended hereby, the Purchase Agreement shall
remain in full force and effect.
5. Indemnity. Kroll hereby agrees to indemnify and hold harmless Palisade, its
partners, directors and officers and each person, if any, who controls Palisade
within the meaning of Section 15 of the Securities Act of 1933, as amended,
against any losses, claims, damages or liabilities, joint or several, to which
Palisade may become subject, insofar as such losses, claims, damages or
liabilities (or actions, suits or proceedings in respect thereof) arise out of
or are based upon the execution and delivery of this Agreement, and to reimburse
Palisade for any reasonable legal or other out-of-pocket expenses incurred by
Palisade in connection with investigating or defending any such loss, claim,
damage, liability, action, suit or proceeding as such expenses are incurred.
6. Amendment to Notes. The parties hereby consent to the execution, delivery and
attachment to the Notes of the Allonge in the form attached hereto as Exhibit A
and to the amendments to the Notes set forth therein.
7. Palisade Contingent Payment. (a) In the event that the volume weighted
average price as determined by the AQR function as reported by Bloomberg LP (the
"VWAP") of Xxxxx'x common stock, par value $.01 per share (the "Common Stock"),
is less than $21.00 per share for the 15 trading day period commencing on the
earlier of (i) the next trading day after the amendment or supplement to the
Registration Statement (as defined below) is filed, and (ii) the date after the
announcement of the "Acquisition" (as defined below) on which Palisade first
makes a sale (long or short) of Common Stock (the "Palisade Post-Closing
Period"), Kroll hereby agrees to pay to Palisade (the "Palisade Payment") the
lesser of (i) $2,000,000, and (ii) the product of (x) the excess of (1) $21.00,
over (2) the VWAP of the Common Stock for the Palisade Post-Closing Period, and
(y) 1,851,851, minus the amount calculated by subtracting (i) $21.00 multiplied
by the number of shares sold (long or short) by Palisade during the Palisade
Post-Closing Period for more than $21.00 per share (the "Shares") from (ii) the
gross proceeds received by Palisade from the sale (long or short) of the Shares
(in each case before deducting brokerage or other fees or commissions). If
required, such payment shall be made by Kroll to Palisade in immediately
available funds within 21 calendar days after the last day of the Palisade
Post-Closing Period.
(b) Palisade shall not be entitled to the Palisade Payment if at any
time during the Palisade Post-Closing Period it sells (long or short) an
aggregate of 1,000,000 or more shares of Common Stock.
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8. Amendment to Registration Statement. On or as soon as practicable following
the closing of Xxxxx'x presently proposed acquisition identified by Kroll in a
separate letter to Palisade (the "Acquisition"), Kroll shall amend or supplement
its Registration Statement on Form S-3 (the "Registration Statement") relating
to the resale of the Notes and the shares of Common Stock issuable upon
conversion of the Notes to include appropriate disclosure in such Registration
Statement relating to the Acquisition and the amendments to the Notes provided
for in this Agreement.
9. Lock-Up Agreement. Palisade hereby agrees that in the event Kroll proposes an
underwritten public offering (the "Offering") of its Common Stock within the
next twelve months, it shall, upon the request of the managing underwriter for
the Offering, enter into a "lock-up" agreement for the period commencing on the
execution of such "lock-up" agreement and expiring 90 days following the pricing
of the Offering and otherwise on such terms as may be reasonably requested by
the managing underwriter for the Offering. Notwithstanding the foregoing, Kroll
acknowledges and agrees that Palisade shall not be required to enter into any
such lock-up agreement until the expiration of the Palisade Post-Closing Period.
10. Further Assurances. Each party agrees from time to time to execute, deliver
and file any and all other agreements, instruments or documents, and take any
and all actions, reasonably requested by any other party to give full force and
effect to, and carry out the intent of, this Agreement and the transactions
contemplated hereby, provided that no party shall be obligated to incur any
obligation, liability or commitment beyond those that are expressly provided for
in this Agreement.
11. Effectiveness. This Agreement and Exhibit A have been duly executed and
delivered by Palisade and, in consideration of $10.00 paid by Kroll to Palisade,
are binding upon and enforceable against Palisade in accordance with their
respective terms provided they are executed by Kroll and delivered by Kroll to
Palisade on or before the earlier of November 30, 2002 and the date the
Acquisition closes. Palisade agrees not to revoke, rescind or otherwise
terminate, or in any way modify, this Agreement or Exhibit A prior to November
30, 2002. If Kroll does not so execute and deliver this Agreement and Exhibit A
by November 30, 2002, this Agreement and Exhibit A shall become null and void
and be of no further force and effect.
12. Assignment; Binding Nature. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, but shall not be assigned by any party without the prior written
consent of the other parties. Nothing contained in this Agreement is intended to
confer upon any Person, other than the parties to this Agreement and their
respective permitted successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
13. Notices. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively given
as hereinafter described: (a) if given by personal delivery, then such notice
shall be deemed given upon such delivery; (b) if given by telex or telecopier,
then such notice shall be deemed given upon receipt of confirmation of complete
transmittal; (c) if given by mail, then such notice shall be deemed given upon
the earlier of: (i) receipt of such notice by the recipient; or (ii) three (3)
Business Days after such notice is deposited in certified mail, return receipt
requested, postage prepaid,
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and; (d) if given by an internationally recognized overnight air courier, then
such notice shall be deemed given one (1) Business Day after delivery to such
carrier. All notices shall be addressed to the party to be notified at the
address as follows, or at such other address (or facsimile number) as such party
may designate by ten days' advance written notice to the other party:
If to Kroll: Xxxxx Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, President and
Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to: Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to Palisade: Palisade Concentrated Equity Partnership, L.P.
Xxx Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
14. Entire Agreement. This Agreement, including Exhibit A hereto, and any
amendments thereto, constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof.
15. Expenses. Kroll hereby agrees to pay all of the reasonable expenses of
Palisade incurred in connection with this Agreement.
16. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.
17. Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular
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instance and either retroactively or prospectively) only with the written
consent of Kroll and the Required Investors. Any amendment or waiver effected in
accordance with this Section 17 shall be binding upon each holder of any Notes
and/or Shares issued under the Purchase Agreement at the time outstanding, each
future holder of all such securities, and Kroll.
18. Certain Interpretive Matters. No provision of this Agreement will be
interpreted in favor of, or against, any of the parties hereto by reason of the
extent to which any such party or its counsel participated in the drafting
thereof or by reason of the extent to which any such provision is inconsistent
with any prior draft hereof and no rule of strict construction will be applied
against any party hereto.
19. Publicity. No public release or public announcement concerning the
transactions contemplated hereby shall be issued by the parties hereto without
the prior consent of Kroll (in the case of a release or announcement by
Palisade) or Palisade (in the case of a release or announcement by Kroll (which
consents shall not be unreasonably withheld), except as such release or
announcement may be required by law or the applicable rules or regulations of
any securities exchange or securities market, in which case Kroll or Palisade,
as the case may be, shall allow Palisade, or Kroll, as applicable, to the extent
reasonably practicable in the circumstances, reasonable time to comment on such
release or announcement in advance of such issuance. Notwithstanding the
foregoing, nothing contained in this Section 18 shall prohibit Kroll from
disclosing the terms of this Agreement in connection with its efforts to arrange
financing for the Acquisition.
20. Titles. The titles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.
21. Governing Law; Consent to Jurisdiction. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of New York
without regard to the choice of law principles thereof. Each of the parties
hereto irrevocably submits to the co-exclusive jurisdiction of the courts of the
State of New York located in New York County and the United States District
Court for the Southern District of New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of the Agreements and the
transactions contemplated thereby. Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in
the world by the same methods as are specified for the giving of notices under
this Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
22. WAIVER OF JURY TRIAL. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING WITHOUT LIMITATION, ANY
COUNTERACTION OR
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COUNTERCLAIM, WHETHER IN CONTRACT, STATUTE, TORT (INCLUDING, WITHOUT LIMITATION,
NEGLIGENCE) OR OTHERWISE.
23. Cumulative Rights. The rights of the parties under this Agreement are
cumulative and in addition to all other rights or remedies that the parties may
otherwise have at law, in equity or otherwise.
24. Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Palisade has executed this Agreement as of the date
first written above.
PALISADE CONCENTRATED EQUITY
PARTNERSHIP, L.P.
By:
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Name:
Title:
PALISADE CONCENTRATED EQUITY
PARTNERSHIP, L.P., as Collateral Agent
By:
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Name:
Title:
Agreed and Accepted this 5th day of September, 2002:
KROLL INC.
By:
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Name:
Title:
