SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[Amendment No.........]
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
American Body Armor & Equipment, Inc.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: _________________________________________
2) Form Schedule or Registration Statement No.: ____________________
3) Filing Party: ___________________________________________________
4) Date Filed: _____________________________________________________
May , 1996
To Our Shareholders:
On behalf of your Company's Board of Directors, I cordially
invite you to attend the Annual Meeting of Shareholders to be held on Friday,
June 14, 1996, at 10:00 A.M., New York City time, at the offices of Kane
Kessler, P.C., 1350 Avenue of the Americas, 26th Floor, New York, New York
10019.
The accompanying Notice of Meeting and Proxy Statement cover
the details of the matters to be presented.
A copy of the 1995 Annual Report is included with this
mailing.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING, I URGE
THAT YOU PARTICIPATE BY COMPLETING AND RETURNING YOUR PROXY AS SOON AS
POSSIBLE. YOUR VOTE IS IMPORTANT AND WILL BE GREATLY APPRECIATED. YOU MAY
REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU DECIDE TO ATTEND THE MEETING.
Cordially,
AMERICAN BODY ARMOR & EQUIPMENT, INC.
Jonathan M. Spiller
President and
Chief Executive Officer
JMS/ksh
AMERICAN BODY ARMOR & EQUIPMENT, INC.
191 NASSAU PLACE ROAD
YULEE, FLORIDA 32097
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on June 14, 1996
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders of American Body Armor & Equipment, Inc., a Florida corporation
(the "Company"), to be held on Friday, June 14, 1996, at the offices of Kane
Kessler, P.C., 1350 Avenue of the Americas, 26th Floor, New York, New York
10019, at 10:00 A.M., New York City time, or any adjournment or postponement
thereof (the "Meeting"), for the following purposes:
1. To elect six directors.
2. To consider and vote upon a proposal to change the
name of the Company to "Armor Holdings, Inc."
3. To consider and vote upon a proposal to reincorporate
the Company under the laws of the State of Delaware by
means of a merger of the Company with and into a newly
formed wholly-owned subsidiary incorporated in the State
of Delaware, as described in the accompanying Proxy
Statement.
4. To consider and vote upon a proposal pursuant to which the
Company will become a holding company and own the capital
stock of its subsidiary corporations, through which the
operations of the Company will be conducted. As part of
such proposal, all of the businesses, assets, liabilities
and operations of the Company will be transferred to a
wholly-owned subsidiary corporation pursuant to
appropriate assignment and assumption agreements in order
to implement such holding company structure.
5. To consider and vote upon a proposal to increase the
number of shares of the Company's authorized common stock
to 50,000,000 shares.
6. To consider and vote upon a proposal to create a series of
preferred stock with such rights, privileges and
preferences as the Board of Directors may determine from
time to time.
7. To consider and vote upon a proposal to adopt the
Company's 1996 Stock Option Plan.
8. To consider and vote upon a proposal to adopt the
Company's 1996 Non-Employee Directors Stock Option Plan.
9. To vote upon a resolution ratifying the appointment of
Deloitte & Touche LLP as the Company's independent
auditors for the fiscal year ending December 31, 1996.
10. To transact such other business as may properly come
before the Meeting.
Only holders of record of the Company's Common Stock, par
value $.03 per share, at the close of business on April 17, 1996 will be
entitled to notice of and to vote at the Meeting.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON IF YOU DECIDE TO ATTEND THE MEETING.
Carol T. Burke
Secretary
AMERICAN BODY ARMOR & EQUIPMENT, INC.
191 NASSAU PLACE ROAD
YULEE, FLORIDA 32097
PROXY STATEMENT
Annual Meeting Of Shareholders
To Be Held on June 14, 1996
----------------
INTRODUCTION
PROXY SOLICITATION AND GENERAL INFORMATION
This Proxy Statement and the enclosed form of proxy (the
"Proxy Card") are being furnished to the holders of Common Stock, par value $.03
per share (the "Common Stock"), of American Body Armor & Equipment, Inc., a
Florida corporation (the "Company" or "ABA"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders to be held on June 14, 1996, at the offices of
Kane Kessler, P.C., 1350 Avenue of the Americas, 26th Floor, New York, New York
10019, at 10:00 A.M., New York City time, and at any adjournment or postponement
thereof (the "Meeting"). This Proxy Statement and the Proxy Card are first being
sent to shareholders on or about May , 1996.
At the Meeting, holders of Common Stock (the "Shareholders")
will be asked:
1. To elect six directors.
2. To consider and vote upon a proposal to change the
name of the Company to "Armor Holdings, Inc."
3. To consider and vote upon a proposal to reincorporate
the Company under the laws of the State of Delaware by
means of a merger of the Company with and into a newly
formed wholly-owned subsidiary incorporated in the State
of Delaware, as described herein (the "Reincorporation").
4. To consider and vote upon a proposal pursuant to
which the Company will become a holding company and own
the capital stock of its subsidiary corporations, through
which the operations of the Company will be conducted. As
part of such proposal, the assets and liabilities of the
Company will be transferred to a wholly-owned subsidiary
corporation pursuant to appropriate assignment and
assumption agreements in order to implement such holding
company structure (the "Restructuring").
5. To consider and vote upon a proposal to increase the
number of shares of the Company's authorized Common Stock
to 50,000,000 shares.
6. To consider and vote upon a proposal to create a series
of preferred stock with such rights, privileges and
preferences as the Board of Directors may determine
from time to time.
7. To consider and vote upon a proposal to adopt the
Company's 1996 Stock Option Plan (the "1996 Plan").
8. To consider and vote upon a proposal to adopt the
Company's 1996 Non-Employee Directors Stock Option Plan
(the "1996 Directors Plan").
9. To vote upon a resolution ratifying the appointment
of Deloitte & Touche LLP as the Company's independent
auditors for the fiscal year ending December 31, 1996
("Fiscal 1996").
10. To transact such other business as may properly come
before the Meeting.
The Board of Directors has fixed the close of business on
April 17, 1996, as the record date for the determination of Shareholders
entitled to notice of and to vote at the Meeting. Each such Shareholder will be
entitled to one vote for each share of Common Stock held on all matters to come
before the Meeting and may vote in person or by proxy authorized in writing.
Shareholders are requested to complete, sign, date and
promptly return the Proxy Card in the enclosed envelope. Common Stock
represented by properly executed proxies received by the Company and not revoked
will be voted at the Meeting in accordance with instructions contained therein.
If the Proxy Card is signed and returned without instructions, the shares will
be voted FOR the election of each nominee for director named herein (Proposal
No. 1) and FOR Proposal Nos. 2, 3, 4, 5, 6, 7, 8 and 9. A Shareholder who so
desires may revoke his proxy at any time before it is voted at the Meeting by
delivering written notice to the Company (attention: Corporate Secretary), by
duly executing a proxy bearing a later date or by casting a ballot at the
Meeting. Attendance at the Meeting will not in and of itself constitute a
revocation of a proxy.
The Board of Directors knows of no other matters that are to
be brought before the Meeting other than as set forth in the Notice of Meeting.
If any other matters properly come before the Meeting, the persons named in the
enclosed form of proxy or their substitutes will vote in accordance with their
best judgment on such matters.
THE MEETING
The Meeting will be held on Friday, June 14, 1996, at 10:00
A.M., New York City time, at the offices of Kane Kessler, P.C., 1350 Avenue of
the Americas, 26th Floor, New York, New York 10019.
Record Date; Shares Outstanding And Entitled To Vote
Only Shareholders as of the close of business on April 17,
1996 (the "Record Date") are entitled to notice of and to vote at the Meeting.
As of the Record Date, there were 6,825,835 shares of Common Stock outstanding
and entitled to vote, assuming the conversion of all issued and outstanding
shares of the Company's 3% Convertible, $1.00 stated value Preferred Stock (the
"Preferred Stock"), with each share entitled to one vote. See "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- CHANGES IN CONTROL" for
a discussion of the conversion of the Preferred Stock.
Required Votes
A plurality of the votes cast by the holders of shares of
Common Stock present in person or by proxy at the Meeting at which a quorum is
present is required for the election of a nominee for director. The approval and
adoption of Proposal Nos. 2, 3, 4, 5 and 6 requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
on said Proposals at the Meeting. Abstentions and broker non-votes will have the
legal effect of a vote against said Proposals. The approval and adoption of
Proposal Nos. 7, 8 and 9 requires the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock, represented in person or by
proxy at the Meeting. Abstentions will have the legal effect of a vote against
Proposal Nos. 7, 8 and 9. With respect to a broker non-vote on Proposal Nos. 7,
8 and 9, such shares will not be considered present at the Meeting and (since
they will not be counted in respect of the matter) the broker non-votes will
have the practical effect of reducing the number of affirmative votes required
to achieve a majority vote for the matter by reducing the total number of shares
from which the majority is calculated.
The directors and officers of the Company (collectively
"Management") own, in the aggregate, approximately 76.6% of the outstanding
shares of the Company's Common Stock and have indicated their intention to vote
for each director nominee and for all other proposals described in this
Proxy Statement. As such, because Management owns approximately 76.6% of the
Company's outstanding shares of Common Stock, it is virtually assured that each
of the nominees for director will be elected and each of the other proposals
described herein will be adopted.
Proxy Solicitation
The Company will bear the costs of the solicitation of proxies
for the Meeting. In addition, directors, officers and employees of the Company
may solicit proxies from Shareholders by mail, telephone, telegram, personal
interview or otherwise. Such directors, officers and employees will not receive
additional compensation but may be reimbursed for out-of-pocket expenses in
connection with such solicitation. Brokers, nominees, fiduciaries and other
custodians have been requested to forward soliciting material to the beneficial
owners of Common Stock held of record by them and such custodians will be
reimbursed for their reasonable expenses.
Independent Accountants
The Company has been advised that representatives of Deloitte
& Touche LLP, the Company's independent accountants for the fiscal year ended
December 31, 1995, the Company's most recently completed fiscal year ("Fiscal
1995"), will attend the Meeting, will have an opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
SECURITY OWNERSHIP
OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of the
Record Date, to the knowledge of the Company, regarding the beneficial ownership
of Common Stock, which is the Company's only class of outstanding voting
securities, by: (i) each Shareholder who owns more than 5% of the outstanding
Common Stock of the Company; (ii) each director; (iii) each of the named
executive officers of the Company; and (iv) all directors and executive officers
of the Company as a group. The information set forth in the table and
accompanying footnotes has been furnished by the named beneficial owners. Since
the table and accompanying footnotes reflect beneficial ownership determined
pursuant to the applicable rules of the Securities and Exchange Commission, the
information is not necessarily indicative of beneficial ownership for any other
purpose.
<TABLE>
<CAPTION>
Name and Address Common Stock No. of
of Beneficial Owner Shares Beneficially Owned % of Class
- ------------------- ------------------------- ----------
<S> <C> <C>
Warren B. Kanders (1) and
Kanders Florida Holdings, Inc. 4,525,178 (1) 66.29%
c/o American Body Armor & Equipment, Inc.
191 Nassau Place Road
Yulee, FL 32097
Jonathan M. Spiller
c/o American Body Armor & Equipment, Inc. 740,205 (2) 10.10%
191 Nassau Place Road
Yulee, FL 32097
Richmont Capital Partners I, L.P. 600,000 (3) 8.08%
4300 Westgrove Drive
Dallas, TX 75248
J. Michael Elliott
c/o American Body Armor & Equipment, Inc. 189,000 (4) 2.70%
191 Nassau Place Road
Yulee, FL 32097
Burtt R. Ehrlich
c/o American Body Armor & Equipment, Inc. 182,300 (5) 2.65%
191 Nassau Place Road
Yulee, FL 32097
Nicholas Sokolow
c/o American Body Armor & Equipment, Inc. 122,500 (6) 1.79%
191 Nassau Place Road
Yulee, FL 32097
Richard T. Bistrong
c/o American Body Armor & Equipment, Inc. 50,000 (7) .73%
191 Nassau Place Road
Yulee, FL 32097
Thomas W. Strauss
c/o American Body Armor & Equipment, Inc.
191 Nassau Place Road
Yulee, FL 32097 40,000 (8) .58%
Executive Officers and Directors as a Group
(7 Individuals) 6,449,183 (1)(2)(4)
(5)(6)(7)(8) 78.32%
</TABLE>
(1) Represents 4,524,178 shares owned by Kanders Florida Holdings, Inc. ("KFH"),
which are deemed to be beneficially owned by Warren B. Kanders because he is
the sole shareholder and sole director of KFH. Of the shares listed, Mr.
Kanders owns 29,141 shares individually.
(2) Includes 432,000 stock options granted to Mr. Spiller under the terms of his
previous employment agreement, which was executed on January 1, 1994 but
which was mutually terminated by Mr. Spiller and the Company and superseded
by a new employment agreement executed on January 18, 1996, and 18,000
shares granted to Mr. Spiller pursuant to the Company's 1994 Incentive Stock
Plan. Such options are fully vested but unexercised. Also includes a maximum
of 50,000 stock options, subject to reduction, awarded to Mr. Spiller on
January 19, 1996. These options are fully vested but unexercised. Of the
740,205 shares listed, 690,105 are subject to a three year lock-up agreement
by and among Mr. Spiller and KFH. Pursuant to the terms of a letter
agreement, dated January 18, 1996 (the "Letter Agreement"), Mr. Spiller
agreed that he will not, directly or indirectly, without the prior written
consent of KFH, offer to sell, sell, grant any options for the sale of,
assign, transfer, pledge, hypothecate or otherwise encumber or dispose of
such shares of Common Stock of the Company or securities convertible into,
exercisable or exchangeable for or evidencing any right to purchase or
subscribe for, such shares of Common Stock of the Company or dispose of any
beneficial interest therein for a period of three years from January 18,
1996, except as provided in such Letter Agreement. KFH and Mr. Spiller
entered into an agreement, dated as of January 18, 1996, pursuant to which
KFH granted a beneficial ownership interest in 316,823 shares of Common
Stock of the Company owned by KFH. Such agreement provides that, in the
event that KFH sells at least 452,604 shares of Common Stock of the Company
in a single transaction, then Mr. Spiller shall have the option to either
(i) pay to KFH an amount equal to the Spiller Acquisition Cost (as defined
in such agreement), in which event Mr. Spiller will be entitled to receive
stock certificates representing such 316,823 shares of Common Stock, or (ii)
receive the net proceeds relating to 316,823 shares of Common Stock that are
the subject of the sale by KFH, reduced by the Spiller Acquisition Cost
relating to such shares of Common Stock so sold by KFH. In the event that
KFH does not sell at least 452,604 shares of Common Stock as described
above, then Mr. Spiller's rights to the 316,823 shares of Common Stock shall
vest on January 18, 1999; provided, however, that, at such time, Mr. Spiller
is the President and Chief Executive Officer of the Company and his
Employment Agreement with the Company, dated as of January 18, 1996, is in
full force and effect and Mr. Spiller is not in breach thereof; and,
provided, further, that if Mr. Spiller's Employment Agreement with the
Company is terminated due to his death or disability, or without cause,
prior to January 18, 1999, then a pro-rata portion of such 316,823 shares of
Common Stock, based upon the number of months elapsed from January 18, 1996
in relation to 36 months, shall vest to Mr. Spiller. Unless sooner acquired
by Mr. Spiller as hereinabove described, Mr. Spiller shall have the right to
acquire any such vested shares of Common Stock pursuant to such agreement on
January 18, 2001 upon payment by Spiller to KFH of the Spiller Acquisition
Cost relating to such shares.
(3) Represents the number of shares deemed to be beneficially owned by Richmont
Capital Partners I, L.P., upon conversion of $3,000,000 principal amount of
convertible subordinated notes into Common Stock at a conversion rate of
$5.00 per share.
(4) Includes 138,000 stock options granted to Mr. Elliott under the terms of his
previous employment agreement, which was executed on January 1, 1994 but
which was mutually terminated by Mr. Elliott and the Company and superseded
by a new employment agreement executed on January 18, 1996, and 30,000 stock
options granted to Mr. Elliott pursuant to the Company's 1994 Incentive
Stock Plan. Such options are fully vested but unexercised. All of the shares
listed are subject to a three year lock-up agreement, by and among Mr.
Elliott and KFH (the "Elliott Lock-Up"). Pursuant to the Elliott Lock-Up,
Mr. Elliott agreed that he will not, directly or indirectly, without the
prior written consent of KFH, offer to sell, sell, grant any options for the
sale of, assign, transfer, pledge, hypothecate or otherwise encumber or
dispose of any shares of Common Stock of the Company or securities
convertible into, exercisable or exchangeable for or evidencing any right to
purchase or subscribe for any shares of Common Stock of the Company or
dispose of any beneficial interest therein for a period of three years from
January 18, 1996, except as provided in such agreement.
(5) Includes 10,000 shares owned by Mr. Ehrlich's children and 20,600 held in
trust for the benefit of his children, of which Mr. Ehrlich's spouse is
trustee, of which he disclaims beneficial ownership. Also includes 400
shares owned by Mr. Ehrlich's spouse's individual retirement account, of
which Mr. Ehrlich disclaims beneficial ownership. Also includes 50,000
shares which are deemed to be beneficially owned by Mr. Ehrilich upon
conversion of $250,000 principal amount of convertible subordinated notes
into Common Stock at a conversion rate of $5.00 per share. Of the 182,300
shares listed, 100,000 shares are subject to a three year lock-up agreement
by and among Mr. Ehrlich and KFH (the "Ehrlich Lock-Up"). Pursuant to the
Ehrlich Lock-Up, Mr. Ehrlich agreed that he will not, directly or
indirectly, without the prior written consent of KFH, offer to sell, sell,
grant any options for the sale of, assign, transfer, pledge, hypothecate or
otherwise encumber or dispose of any shares of Common Stock of the Company
or securities convertible into, exercisable or exchangeable for or
evidencing any right to purchase or subscribe for any shares of Common Stock
of the Company or dispose of any beneficial interest therein for a period of
three years from January 18, 1996, except as provided in such agreement.
(6) Represents 100,000 shares owned by S.T. Investors Fund, LLC ("STI"), a
limited liability company of which Mr. Sokolow is a member and 20,000 shares
owned by Mr. Sokolow's children, of which he disclaims beneficial ownership.
Of the 122,500 shares listed, 100,000 shares are subject to a three year
lock-up agreement, by and among STI and KFH (the "STI Lock-Up"). Pursuant to
the STI Lock-Up, STI agreed that it will not, directly or indirectly,
without the prior written consent of KFH, offer to sell, sell, grant any
options for the sale of, assign, transfer, pledge, hypothecate or otherwise
encumber or dispose of any shares of Common Stock of the Company or
securities convertible into, exercisable or exchangeable for or evidencing
any right to purchase or subscribe for any shares of Common Stock of the
Company or dispose of any beneficial interest therein for a period of three
years from January 18, 1996, except as provided in such agreement.
(7) Includes 50,000 stock options granted to Mr. Bistrong under the terms of
his previous employment agreement, which was executed on February 5, 1995
but which was mutually terminated by Mr. Bistrong and the Company and
superseded by a new employment agreement executed on January 18, 1996. Such
options are fully vested but unexercised. All of the shares listed are
subject to a three year lock-up agreement, by and among Mr. Bistrong and KFH
(the "Bistrong Lock-Up"). Pursuant to the Bistrong Lock-Up, Mr. Bistrong
agreed that he will not, directly or indirectly, without the prior written
consent of KFH, offer to sell, sell, grant any options for the sale of,
assign, transfer, pledge, hypothecate or otherwise encumber or dispose of
any shares of Common Stock of the Company or securities convertible into,
exercisable or exchangeable for or evidencing any right to purchase or
subscribe for any shares of Common Stock of the Company or dispose of any
beneficial interest therein for a period of three years from January 18,
1996, except as provided in such agreement.
(8) Represents the number of shares deemed to be beneficially owned by Mr.
Strauss, upon conversion of $200,000 principal amount of convertible
subordinated notes into Common Stock at a conversion rate of $5.00 per
share.
Changes in Control
Since the beginning of Fiscal 1995, the Company has undergone a
change in control in connection with the purchase by Kanders Florida Holdings,
Inc. ("KFH") and other investors (the "Investors") of all of the capital stock
of the Company owned by Clark Schwebel, Inc. ("Clark Schwebel"), a supplier of
raw materials to the Company, and Hexcel Corporation as of January 18, 1996 (the
"Purchase"). See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS--TRANSACTIONS
WITH MANAGEMENT AND OTHERS" for a discussion of the Company's transactions with
Clark Schwebel. Prior to the closing of the Purchase (the "Closing"), at a
meeting held on January 18, 1996, the then existing Board of Directors, which
consisted of Jonathan M. Spiller, Julius Lasnick, Gardner F. Davis, John Innes
and Robert Sullivan, authorized the officers of the Company to take such actions
as the officers deemed necessary, prudent and appropriate to facilitate the
Purchase by KFH and the Investors. Following such action, Messrs. Lasnick,
Davis, Innes and Sullivan conditionally resigned from the Board of Directors,
effective upon the Closing. Such resignations were conditioned upon the
occurrence of the Closing. Contemporaneously with the tendering by Messrs.
Lasnick, Davis, Innes and Sullivan of their conditional resignations, the Board
of Directors appointed Warren B. Kanders ("Kanders"), who was elected Chairman
of the Board of Directors, Burtt R. Ehrlich ("Ehrlich") and Nicholas Sokolow
("Sokolow"), to the vacancies to be created by such resignations. Kanders is the
sole shareholder and sole director of KFH. Ehrlich is a Trustee of the Reserve
Private Equity Series of mutual funds and a Director of the Cater Allen family
of mutual funds. Sokolow, a senior partner in the law firm of Sokolow, Dunaud,
Mercadier & Carreras, is a member of S.T. Investors Fund, LLC. Upon assuming
office, Messrs. Kanders, Ehrlich and Sokolow constituted a majority of the Board
of Directors.
The shares of Common Stock of the Company acquired by KFH were paid
for out of KFH's working capital funds. KFH acquired an aggregate of 2,880,217
shares of the Company's Common Stock and an aggregate of 1,131,075 shares of the
Company's Preferred Stock, for an aggregate purchase price of $3,190,000, of
which an aggregate of $2,340,000 was paid in cash. The remaining $850,000 of the
purchase price was paid by promissory notes. To secure the payment of the
promissory notes, KFH pledged to Springs Industries, Inc. ("Springs"), the
parent corporation of Clark Schwebel, 900,000 shares of the Company's Common
Stock. Contemporaneously with the Purchase by KFH, Mr. Kanders individually
acquired 28,141 shares of the Company's Common Stock. Mr. Kanders acquired an
additional 1,000 shares of Common Stock upon the listing of the Company's Common
Stock on the American Stock Exchange on March 18, 1996.
Upon assuming their positions, the newly constituted Board of
Directors of the Company elected to require the holders of the Company's
Preferred Stock to convert such shares to Common Stock at 110% of the aggregate
stated value of the Preferred Stock, at a conversion price of $.77 per share
(fair market value as determined by an independent valuation firm), as required
by the Company's Amended and Restated Articles of Incorporation (the "Charter").
All shares of the Company's Preferred Stock were deemed to have been converted
upon such election by the Board of Directors.
Following the Closing, and assuming the conversion of the shares of
Preferred Stock owned by KFH, KFH and Mr. Kanders collectively owned 4,524,178
of the total outstanding shares of Common Stock of the Company, which holdings
constituted approximately 66.29% of the total outstanding shares of Common Stock
of the Company.
As of the Record Date, KFH and Mr. Kanders owned 4,525,178 of the
total outstanding shares of Common Stock of the Company, which holdings
constitute approximately 66.29% of the total outstanding shares of Common Stock
of the Company. Management of the Company owns, in the aggregate, approximately
76.6% of the total outstanding shares of the Company's Common Stock and have
indicated their intention to vote for the election of each of the nominees for
director and the approval and adoption of each of the Proposals presented in
this Proxy Statement. Therefore, election of each of the nominees for director
and the adoption of each of the Proposals discussed herein is virtually assured.
No further changes in control of the Company are currently
contemplated.
The Company is not aware of any material proceedings to which any
director, executive officer or affiliate of the Company or any security holder,
including any owner of record or beneficially of more than 5% of any class of
the Company's voting securities, is a party adverse to the Company or has a
material interest adverse to the Company.
The Company is not aware of any material pending legal proceedings,
other than ordinary routine litigation incidental to the business of the
Company, to which any director or officer of the Company is a party or of which
any of their property is the subject.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Charter provides that the Company shall have at least
three and no more than fifteen directors. The Amended and Restated Bylaws of the
Company (the "Bylaws") grant the power to fix from time to time the number of
directors within such minimum and maximum to the Board of Directors. Currently,
the number of directors is fixed at four. The Board of Directors has presently
determined that there will be six directors for the ensuing year. At the
Meeting, six directors are to be elected to serve until the next Annual Meeting
of Shareholders or until their successors are duly elected and qualified.
The persons named in the enclosed form of proxy have advised that,
unless contrary instructions are received, they intend to vote FOR the election
of the nominees named in the following table, all of whom, with the exception of
Thomas W. Strauss and Richmont nominee, are currently directors of the Company.
The Board of Directors does not expect that any of the nominees will be
unavailable for election as a director.
The following information concerning the nominees is as of the
Record Date.
<TABLE>
<CAPTION>
Positions Director
Name Age and Office Since
- ---- --- ---------- ------
<S> <C> <C> <C>
Warren B. Kanders (1)(2) 38 Chairman of the Board of Directors 1996
Jonathan M. Spiller 44 Director, Chief Executive Officer and President 1991
Burtt R. Ehrlich (1)(2) 56 Director 1996
Nicholas Sokolow (1)(2) 46 Director 1996
Thomas W. Strauss 53 Director --
Richmont nominee - Director --
</TABLE>
(1) Member of Audit Committee
(2) Member of Compensation Committee
Directors of the Company are elected annually at the Annual Meeting
of Shareholders. Their respective terms of office continue until the next Annual
Meeting of Shareholders and until their successors have been elected and
qualified in accordance with the Company's Bylaws. There are no family
relationships among any of the directors or executive officers of the Company.
Warren B. Kanders
Warren B. Kanders was elected Chairman of the Board of Directors on
January 18, 1996. Mr. Kanders has also served as Vice Chairman of the Board of
Directors of Benson Eyecare Corporation, a New York Stock Exchange listed
company, since October 1992. Mr. Kanders was the President and a Director of
Pembridge Holdings, Inc. from June 1992 to March 1993. Mr. Kanders is also a
Director of Eyecare Products plc, a United Kingdom public company listed on the
London Stock Exchange. Since 1990, Mr. Kanders has been President of Kanders and
Company, Inc., an investment management company. From 1987 to 1990, Mr. Kanders
was the founder and Managing Director of Great Pacific Capital, Inc., which
provided investment management advice to the Jim Pattison Group, one of Canada's
largest privately-owned companies. From 1983 to 1987, Mr. Kanders was Vice
President and Director of U.S. Mergers and Acquisitions for Orion Royal Bank
Limited, a merchant bank wholly-owned by the Royal Bank of Canada. Mr. Kanders
also serves as Trustee and Chairman of the Investment Committee of Choate
Rosemary Hall School, Wallingford, Connecticut. Mr. Kanders received a B.A.
degree in Economics from Brown University.
Jonathan M. Spiller
Jonathan M. Spiller has been a Director of the Company since July
1991 and is the Company's President and Chief Executive Officer. Mr. Spiller
became President of the Company in June 1991, and has served as its Chief
Executive Officer since September 21, 1993. Mr. Spiller formerly served as the
Company's Chief Operating Officer from June 1991 to September 1993, when he was
named Chief Executive Officer. Mr. Spiller is a certified public accountant and
was previously a partner in the international accounting firm of Deloitte &
Touche LLP, where he spent a total of eighteen years, most recently as a partner
in the Capital Markets Group, where he was responsible for international
transactions. From March 1988 to July 1989, Mr. Spiller was the Senior Vice
President and Chief Financial Officer of Hunter Environmental Services, Inc., a
large publicly held company in the environmental field. Mr. Spiller received a
B.S. degree in Economics from the University of Wales and is a Fellow of the
Institute of Chartered Accountants in England and Wales. For additional
information concerning Mr. Spiller, See "EXECUTIVE OFFICES-INVOLVEMENT IN
CERTAIN LEGAL PROCEEDINGS".
Burtt R. Ehrlich
Burtt R. Ehrlich was elected a Director of the Company on January
18, 1996. Mr. Ehrlich previously served as a Director of Benson Eyecare
Corporation, a New York Stock Exchange listed company, from its inception in
1986 to 1995, and as its Chairman and Chief Operating Officer from 1986 until
October 1992. Mr. Ehrlich is a Trustee of the Reserve Private Equity Series of
mutual funds and a Director of the Cater Allen family of mutual funds in the
United Kingdom. He is also a former Treasurer and Trustee of the Carnegie
Council on Ethics and International Affairs, and a former Trustee of the
Buckingham Browne and Nichols School. Mr. Ehrlich received a B.A. degree from
Columbia College and an M.B.A. from Columbia University Graduate School of
Business.
Nicholas Sokolow
Nicholas Sokolow was elected a Director of the Company on January
18, 1996. Mr. Sokolow is a senior partner in the law firm of Sokolow, Dunaud,
Mercadier & Carreras. From June 1973 until October 1994, Mr. Sokolow was an
associate and partner with the international law firm of Coudert Brothers. Mr.
Sokolow is also a Director of Rexel, Inc., a New York Stock Exchange listed
company. Mr. Sokolow, who is a member of the Paris Bar, received his
education from the Paris School of Law, Institute of Political
Sciences-Business Administration and the University of Michigan.
Thomas W. Strauss
Thomas W. Strauss is a Principal with Ramius Capital Group, a
privately held investment management firm. Prior to joining Ramius Capital, Mr.
Strauss was Co-Chairman of Granite Capital International Group.
From 1963 to 1991, Mr. Strauss was with Salomon Brothers Inc. He was
admitted as a General Partner in 1972 and was appointed to the Executive
Committee in 1981. In 1986, Mr. Strauss became President of Salomon Brothers Inc
and a Vice Chairman and member of the Board of Directors of Salomon Inc, the
holding company of Salomon Brothers and Phibro Energy, Inc. As President, he had
a special focus on the International Investment Banking and High Yield
activities of the Firm. Prior to becoming President, he was responsible for the
U.S. Government, Money Market and Foreign Exchange Departments.
Mr. Strauss is a former member of the Boards of Governors of the
American Stock Exchange, the Chicago Mercantile Exchange, the Public
Securities Association, the Securities Industry Association and a former
member of the U.S. Japan Business-Council. He is a past President of the
Association of Primary Dealers in U.S. Government Securities.
Mr. Strauss currently serves as a member of the Boards of Trustees
of The Mount Sinai Medical Center, Riverdale Country School, the Board of
Overseers of the School of Arts & Sciences of the University of Pennsylvania,
the Advisory Board of Randall's Island Sports Foundation and The Corporation of
the Hurricane Island Outward Bound School. Mr. Strauss received a B.A. degree in
Economics from the University of Pennsylvania. For additional information
concerning Mr. Strauss, See "INFORMATION CONCERNING MEETINGS OF THE BOARD OF
DIRECTORS AND BOARD COMMITTEES AND DIRECTOR COMPENSATION-INVOLVEMENT IN CERTAIN
LEGAL PROCEEDINGS".
Vote Required
The nominees for directors who receive a plurality of the votes cast
by the holders of the outstanding Common Stock entitled to vote at the Meeting
at which a quorum is present will be elected to the Board of Directors.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR each of the above-named
director nominees.
INFORMATION CONCERNING MEETINGS OF THE BOARD OF
DIRECTORS AND BOARD COMMITTEES AND DIRECTOR COMPENSATION
During Fiscal 1995, the Board of Directors held seven meetings. The
Board of Directors has standing Audit and Compensation Committees. During Fiscal
1995, all of the directors then in office attended at least 75% of the total
number of meetings of the Board of Directors and the Committees of the Board of
Directors on which they served. The Audit and Compensation Committees do not
meet on a regular basis, but only as circumstances require. The Board of
Directors does not have a nominating committee. The usual functions of such a
committee are performed by the entire Board of Directors.
Audit Committee
The functions of the Audit Committee are to recommend to the Board
of Directors the appointment of independent auditors for the Company, to analyze
the reports and recommendations of such auditors and to review internal audit
procedures and controls. During Fiscal 1995, the Audit Committee met three
times. Prior to the Closing and before their resignations from the Board of
Directors became effective, Messrs. Lasnick, Gardner, Innes and Sullivan
constituted all of the members of the Audit Committee. The Audit Committee
currently consists of Messrs. Ehrlich (Chairman), Kanders and Sokolow.
Compensation Committee
The functions of the Compensation Committee are to recommend to the
Board of Directors the compensation and benefits of the Company's executive
officers and other key managerial personnel. In this regard, the Compensation
Committee administers and recommends to the Board of Directors awards pursuant
to the Company's restricted stock and incentive stock plans. During Fiscal 1995,
the Compensation Committee met three times. Prior to the Closing and before
their resignations from the Board of Directors became effective, Messrs.
Lasnick, Gardner, Innes and Sullivan constituted all of the members of the
Compensation Committee. The Compensation Committee currently consists of Messrs.
Sokolow (Chairman), Kanders and Ehrlich.
Compensation of Directors
During Fiscal 1995, each non-Management director (an "Outside
Director") was entitled to receive, pursuant to the terms of the Company's 1994
Outside Directors' Stock Plan (the "Outside Directors Stock Plan"), which was
implemented in 1994 following the approval of the Shareholders at the 1994
annual meeting, an annual retainer of $5,000 plus $1,000 for attendance at each
special meeting of the Board of Directors. Additionally, the Chairman of the
Audit Committee of the Board of Directors was entitled to $1,000 for each
Committee meeting. Under the terms of the Outside Directors' Stock Plan, which
will be discontinued to the extent that no additional awards will be granted
under said plan if the Shareholders approve Proposal No. 8, Outside Directors'
fees may be paid either: (i) 30% in cash and 70% in stock; (ii) 100% in cash; or
(iii) 100% in stock.
Involvement in Certain Legal Proceedings
Except as hereinafter provided with respect to Mr. Strauss, a
director nominee, and as hereinafter provided in "EXECUTIVE OFFICERS-INVOLVEMENT
IN CERTAIN LEGAL PROCEEDINGS" with respect to Mr. Spiller and J. Michael
Elliott, the Vice President-Operations of the Company, no director, director
nominee, executive officer, promoter or control person has, within the last five
years: (i) had a bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time; (ii) been convicted in a
criminal proceeding or is currently subject to a pending criminal proceeding
(excluding traffic violations or similar misdemeanors); (iii) been subject to
any order, judgment or decree, not subsequently reversed, suspended or vacated,
of any court of competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; (iv) been found by a court of
competent jurisdiction (in a civil action), the Securities and Exchange
Commission (the "SEC") or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment has
not been reversed, suspended or vacated.
On December 3, 1992, without admitting or denying any liability, Mr.
Strauss, a director nominee, consented to an order of the SEC under which he was
suspended from associating with any broker, dealer, municipal securities dealer,
investment company or investment advisor for a period of six (6) months, and
paid a civil penalty of $75,000. The central claim in these proceedings was that
as President of Salomon Brothers Inc ("Salomon"), Mr. Strauss delayed in
reporting an unauthorized bid by the head of Salomon's Government Trading Desk
who reported to one of Mr. Strauss' subordinates. Mr. Strauss has maintained
that he reported the unauthorized bid both to Salomon's Chief Executive Officer
and General Counsel immediately upon learning of the unauthorized bid.
EXECUTIVE OFFICERS
Set forth below is certain information, as of the Record Date,
concerning the Company's executive officers. Each of the persons identified
below will continue to serve in such capacity until the next meeting of the
Board of Directors appointing officers and until a successor is duly elected and
qualified. Each of the persons listed below has consented to serve in the
capacities set forth beside their respective names. For biographical information
concerning Mr. Spiller, see "Proposal No. 1 - Election of Directors".
<TABLE>
<CAPTION>
Executive
Officer
Name Age Position Since
- ---- --- -------- -----
<S> <C> <C> <C>
Jonathan M. Spiller 44 President and Chief Executive Officer 1991
Richard T. Bistrong 33 Vice President - 1995
Sales and Marketing
Carol T. Burke 34 Vice President - Finance and Secretary 1995
J. Michael Elliott 44 Vice President-Operations 1993
Richard T. Bistrong
</TABLE>
Mr. Bistrong has been the Company's Vice President of Sales and
Marketing since February 1995, when he joined the Company. He is responsible for
managing and directing all efforts and activities of the Company's domestic
sales staff. Mr. Bistrong is also responsible for the development and support of
all distributor relationships. Prior to joining the Company, Mr. Bistrong held
the position of Director of Retail Operations for Fechheimer Brothers Company, a
wholly-owned subsidiary of Berkshire Hathaway, for a period of two years. From
1986 to 1992, Mr. Bistrong was the Executive Vice President of Point Blank Body
Armor where he was responsible for the domestic sales organization. Mr. Bistrong
has a B.A. degree in Political Science from the University of Rochester and a
Masters of Arts degree in Foreign Affairs from the University of Virginia.
Carol T. Burke
Ms. Burke has been the Vice President of Finance of the Company
since January 1996 and its Secretary since March 4, 1996. Ms. Burke joined
the Company as Controller in January 1995. She oversees and directs
all treasury, budgeting and accounting activities for the Company. Ms. Burke
is also responsible for the analysis of general economic, business and
financial conditions and their impact on the Company's policies and operations.
Ms. Burke, who is a certified public accountant, previously spent over five
years with the Walt Disney organization as a Senior Finance Manager where
she worked in both Orlando and at the Euro Disney operation in France. Prior
to that time, Ms. Burke served as a Senior Auditor for Arthur Andersen &
Co. Ms. Burke has a B.S. degree in both Accounting and Management Science from
the University of South Carolina.
J. Michael Elliott
Mr. Elliott has been a Vice President of the Company since October
1991. Mr. Elliott also previously served as the Secretary of the Company.
He is responsible for manufacturing (including quality control) and all of
the technical aspects of product development. Mr. Elliott is actively
involved in the marketing of the Company's Explosive Ordnance Disposal
products (EOD) and in sales to the United States military. Mr. Elliott has a
B.S. degree in Industrial Technology from California State University and
has significant background in the industry. Mr. Elliott previously served as
Executive Vice-President at O'Gara Coachworks, Vice President of Operations
of Protective Materials Company from 1986 to 1990, and from 1990 until October
1991 when he joined the Company, Mr. Elliott was Vice President and Chief
Operating Officer of Wes-Pine Woodworking, Inc., a window manufacturing
company located in Massachusetts.
Involvement in Certain Legal Proceedings
Messrs. Spiller and Elliott were employed by and served in similar
positions with the Company at the time the Company filed for Chapter 11
bankruptcy protection in May 1992 through the confirmation on September 20, 1993
of the Company's Third Amended and Restated Plan of Reorganization (the "Plan of
Reorganization"), by the United States Bankruptcy Court, Middle District of
Florida, Jacksonville Division (the "Bankruptcy Court").
EXECUTIVE COMPENSATION
Compensation of Executive Officers
The following table sets forth all compensation, in excess of
$100,000, paid to the Company's Chief Executive Officer and the four other most
highly compensated executive officers of the Company for the fiscal years 1995,
1994 and 1993. The Company paid no compensation to its executive officers under
any long term compensation or retirement plans during the last three years. The
incremental cost of certain incidental personal benefits does not exceed the
lesser of $50,000 or 10% of compensation for any named executive officer of the
Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation
Awards
(a) (b) (c) (d) (g) (i)
Securities All Other
Name and Underlying Compen-
Principal Salary Bonus Options/SARs sation
Position Year ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C>
Jonathan M. Spiller 1995 $160,000 $ 21,000 18,000 $5,775(1)
President and Chief 1994 $140,000 $ 62,000 432,000 --
Executive Officer 1993 $137,801 -- -- --
Richard T. Bistrong 1995 $120,000 $105,000 50,000 --
Vice President-Sales 1994 -- -- -- --
and Marketing 1993 -- -- -- --
J. Michael Elliott 1995 $100,000 $ 7,000 30,000 $9,660(2)
Vice President-Operations 1994 $ 90,010 $ 27,000 138,000 --
1993 $ 85,020 -- -- --
</TABLE>
(1) Represents the dollar value of 7,500 Common Stock grants awarded to Mr.
Spiller in December 1995. They became fully vested on January 19, 1996.
(2) Represents the dollar value of 12,000 Common Stock grants awarded to Mr.
Elliott pursuant to the terms of his previous employment agreement, which
was executed on January 1, 1994 but which was mutually terminated by Mr.
Elliott and the Company and superseded by a new employment agreement
executed on January 18, 1996. 4,000 of such grants became fully vested in
June 1995, and the additional 8,000 grants became fully vested on January
19, 1996.
OPTION/SAR GRANTS TABLE
The following table summarizes individual grants of stock options (whether or
not in tandem with stock appreciation rights ("SARs")), and freestanding SARs
made during Fiscal 1995, the Company's most recently completed fiscal year, to
each of the named executive officers.
STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
Number of % of Total
Securities Options/SARs Exercise or Expiration
Underlying Granted to Base Price Date
Options/SARs Employees in ($/share)
Name Granted (#) Fiscal Year
<S> <C> <C> <C> <C>
Jonathan M. Spiller 18,000 12.5% $.97 3/28/2005
President and Chief
Executive Officer
Richard T. Bistrong 50,000 34.8% $.97 2/6/2005
Vice President-Sales and
Marketing
J. Michael Elliott 30,000 20.9% $.97 3/28/2005
Vice President - Operations
</TABLE>
(1) Stock option grants consist of stock options granted in Fiscal 1995,
pursuant to the Company's 1994 Incentive Stock Plan, all of which are fully
vested but are not exercisable until the expiration of the respective named
executive's employment agreement.
OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table summarizes information concerning each
exercise of stock options (or tandem SARs) and freestanding SARs made during
Fiscal 1995, the Company's most recently completed fiscal year, to each of the
named executive officers, and the fiscal year-end value of unexercised options
and SARs. No options were exercised in Fiscal 1995.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of
Number of Securities Unexercised
Underlying Unexercised In-the-Money
Options/SARs at FY-End Options/SARs at
(#) FY-End ($)
Shares Acquired Value Exercisable (E)/ Exercisable (E)/
Name on Exercise (#) Realized Unexercisable (U) Unexercisable (U)
($)
<S> <C> <C> <C> <C>
Jonathan M. Spiller -0- -0- 324,000(E) -0-(E)
President and Chief Executive 126,000(U) -0-(U)
Officer
Richard T. Bistrong -0- -0- -0-(E) -0-(E)
Vice President-Sales and 50,000(U) -0-(U)
Marketing
J. Michael Elliott -0- -0- 103,500(E) -0-(E)
Vice President - Operations 64,500(U) -0-(U)
</TABLE>
Pension/Long-Term Compensation Arrangements
The Company has no pension arrangements or other long-term
compensation plans for its executive officers or other employees.
Employment Agreements
Set forth below are descriptions of the Company's employment
agreements with Messrs. Spiller, Elliott and Bistrong. No employment agreement
has been entered into between Ms. Burke and the Company.
Jonathan M. Spiller
Mr. Spiller's employment agreement, dated as of January 18,
1996, provides that he will serve as the President and Chief Executive Officer
of the Company for an initial term expiring January 17, 1999, at a base salary
of $160,000 per annum. In addition to his base salary, Mr. Spiller shall also be
entitled to a yearly bonus during the term of his employment agreement. The
bonus shall be based upon the Company's earnings before interest and taxes. Mr.
Spiller will also be entitled, at the sole and absolute discretion of the
Compensation Committee of the Board of Directors, to participate in the
Company's incentive stock plan and other bonus plans adopted by the Company.
Eligibility to participate in the Company's incentive stock plan shall be based
upon, among other things, the performance of Mr. Spiller and the Company. As
part of his compensation package, the Company provides Mr. Spiller with other
benefits commensurate with his position, as more fully set forth in his
employment agreement. Mr. Spiller's employment with the Company shall continue,
unless earlier terminated by Mr. Spiller or due to Mr. Spiller's death or
disability or by the Company, for successive one year periods, on terms to be
mutually agreed upon by the Company and Mr. Spiller.
Richard T. Bistrong
Mr. Bistrong's employment agreement, dated as of January 18,
1996, provides that he will serve as Vice President-Sales and Marketing of the
Company for an initial term expiring January 17, 1999, at a base salary of
$120,000 per annum. Mr. Bistrong shall also be entitled to a yearly bonus during
the term of his employment agreement. The bonus shall be based upon the
Company's earnings before interest and taxes. In addition to his base salary and
bonus, Mr. Bistrong is entitled to receive non-qualified options to purchase
21,250 shares of the Company's Common Stock and incentive stock options to
purchase 28,750 shares of the Company's Common Stock, in each case at an
exercise price of $.97 per share of Common Stock. These options are exercisable
for a period of eight years from the date of the grant, and all of such options
vest on January 18, 1999. The vesting of the options may be accelerated on a pro
rata basis in the event of the occurrence of certain events. Pursuant to his
employment agreement, Mr. Bistrong will also be entitled, at the sole and
absolute discretion of the Compensation Committee of the Board of Directors, to
participate in the Company's incentive stock plan and other bonus plans adopted
by the Company. Eligibility to participate in the Company's incentive stock plan
shall be based upon, among other things, the performance of Mr. Bistrong and the
Company. As part of his compensation package, the Company provides Mr. Bistrong
other benefits commensurate with his position, as more fully set forth in his
employment agreement. Mr. Bistrong's employment with the Company shall continue,
unless earlier terminated by Mr. Bistrong or due to Mr. Bistrong's death or
disability or by the Company, for successive one year periods, on terms to be
mutually agreed upon by the Company and Mr. Bistrong.
J. Michael Elliott
Mr. Elliott's employment agreement, dated as of January 18,
1996, provides that he will serve as Vice President-Operations of the Company
for an initial term expiring January 17, 1997, at a base salary of $100,000 per
annum. Mr. Elliott shall also be entitled to a yearly bonus during the term of
his employment agreement. The bonus shall be based upon the Company's earnings
before interest and taxes. In addition to his base salary and bonus, Mr. Elliott
is entitled to receive non-qualified options to purchase 8,500 shares of the
Company's Common Stock and incentive stock options to purchase 11,500 shares of
the Company's Common Stock, in each case at an exercise price of $.97 per share
of Common Stock. These options are exercisable for a period of eight years from
the date of the grant, and all of such options vest on January 18, 1999. The
vesting of the options may be accelerated on a pro rata basis in the event of
the occurrence of certain events. Pursuant to his employment agreement, Mr.
Elliott will also be entitled, at the sole and absolute discretion of the
Compensation Committee of the Board of Directors, to participate in the
Company's incentive stock plan and other bonus plans adopted by the Company.
Eligibility to participate in the Company's incentive stock plan shall be based
upon, among other things, the performance of Mr. Elliott and the Company. As
part of his compensation package, the Company provides Mr. Elliott with other
benefits commensurate with his position, as more fully set forth in his
employment agreement. At the Company's option, Mr. Elliott's employment with the
Company shall continue, unless earlier terminated by Mr. Elliott or due to Mr.
Elliott's death or disability or by the Company, for one two year period, on the
same terms and conditions. Following the two year renewal, the employment of Mr.
Elliott shall automatically continue for successive one year periods on terms to
be mutually agreed upon by the Company and Mr. Elliott.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions With Management And Others
The Company has historically purchased substantially all of the
ballistic resistant fabric used in the manufacture of its products from Clark
Schwebel, a subsidiary of Springs and a former holder of 45.7% of the Company's
outstanding capital stock. KFH purchased all of the capital stock of the Company
owned by Clark Schwebel on January 18, 1996. The Company's purchases from Clark
Schwebel totalled approximately $5.1 million, $4.6 million and $3.9 million in
fiscal years 1995, 1994 and 1993, respectively, and were made in the normal
course of business at prices which the Company believes were competitive with
other available sources for such materials.
Other than as described above, there have not been, nor are there
any currently proposed transactions, or any series of similar transactions,
since the beginning of Fiscal 1995, to which the Company was or is to be a
party, in which the amount involved exceeds $60,000 and in which any director,
executive officer, security holder or any member of the immediate family of any
of the foregoing persons had, or will have, a direct or indirect material
interest.
Since the beginning of Fiscal 1995, no director or executive
officer of the Company, nor any member of their immediate family or any
affiliate thereof is, has become or was indebted to the Company in an amount in
excess of $60,000.
Subsidiaries
The Company is not a subsidiary of any other corporation,
partnership, limited liability company or other entity. If Proposal No.
3 is approved by the Shareholders, the Company will be reincorporated in
the State of Delaware through the merger of the Company with and into a
wholly-owned subsidiary created for such purpose. If Proposal No. 4 is
approved by the Shareholders and all required third party consents are
obtained, and if the Company's Board of Directors continues to deem the
implementation of such proposal to be in the best interests of the
Company, the Company will, upon the taking of appropriate action to
implement such proposal, transfer all of its assets and liabilities into
a wholly-owned subsidiary corporation, which will then become the entity
through which the Company conducts its operations (although other
entities may be set up in the future through which the business of the
Company will be conducted). The Company will then become a holding
company.
PROPOSAL NO. 2
CHANGE OF THE COMPANY'S NAME
On March 4, 1996, the Company's Board of Directors unanimously
approved, subject to Shareholder approval, a change of the Company's name to
"Armor Holdings, Inc." Management believes that the change of the Company's name
is appropriate in light of the nature of its business and Proposal Nos. 3 and 4.
If Proposal No. 3 (Reincorporation of the Company into Delaware)
is approved, the name change will be effected by virtue of the merger described
in Proposal No. 3. If this Proposal is approved by the Shareholders, but
Proposal No. 3 is not approved by the Shareholders, the Charter will be amended
to delete Article I in its entirety and replace the same with the following:
"ARTICLE I.
The name of the corporation shall be Armor Holdings, Inc., and the
address of the principal office and mailing address of the
corporation is at 191 Nassau Place Road, Yulee, Florida 32097"
Vote Required
The affirmative vote of the holders of a majority of the
outstanding shares of the Company's Common Stock is required to approve this
Proposal No. 2.
Recommendation of the Board of Directors
The Board of Directors believes that the proposed change in the
name of the Company to Armor Holdings, Inc. is in the best interests of the
Company, and for that reason, the Board of Directors recommends that the
Shareholders vote FOR Proposal No. 2 on the Proxy Card.
PROPOSAL NO. 3
REINCORPORATION IN DELAWARE
General
On March 4, 1996, the Board of Directors unanimously approved, and
recommends for Shareholder approval, the change of the Company's state of
incorporation from Florida to Delaware (the "Reincorporation"). The transaction
will not result in any change in the business, management, assets, liabilities
or net worth of the Company. Reincorporation in Delaware will allow the Company
to take advantage of certain provisions of the corporate laws of Delaware. The
purposes and effects of the proposed transaction are summarized below.
In order to effect the Company's Reincorporation in Delaware, the
Company will be merged with and into Armor Holdings, Inc. ("Armor Holdings"), a
newly formed, wholly-owned subsidiary of the Company incorporated in Delaware.
Following the Reincorporation, Armor Holdings will qualify to conduct business
in Florida as a foreign corporation. Armor Holdings has not engaged in any
activities except in connection with the proposed transaction. The mailing
address of its principal executive offices and its telephone number are the same
as those of the Company. As part of its approval and recommendations of the
Company's Reincorporation in Delaware, the Board of Directors has approved, and
recommends to the Shareholders for their adoption and approval, an Agreement and
Plan of Merger (the "Reincorporation Agreement") pursuant to which the Company
will be merged with and into Armor Holdings. The full texts of the
Reincorporation Agreement and the Certificate of Incorporation (the "Armor
Holdings Certificate of Incorporation") and Bylaws (the "Armor Holdings Bylaws")
of the successor Delaware company under which the Company's business would be
conducted after the Reincorporation are set forth as Appendices A, B and C,
respectively, hereto. The discussion contained in this Proxy Statement is
qualified in its entirety by reference to such Appendices.
In the following discussion of the proposed Reincorporation, the
term "Company" includes either or both, the Company and Armor Holdings as the
context may require, without regard to the state of incorporation.
Upon Shareholder approval of the Reincorporation and the
receipt by the Company of any required third party consents to the
Reincorporation, including, but not limited to, the consent of the Bankruptcy
Court, if required, and upon the filing of appropriate certificates of
merger by the Secretaries of State of the States of Florida and
Delaware, the Company will be merged with and into Armor Holdings
pursuant to the Reincorporation Agreement, resulting in a change in the
Company's state of incorporation from Florida to Delaware. The Company
will then be subject to the Delaware General Corporation Law ("DGCL")
and the Armor Holdings Certificate of Incorporation and the Armor
Holdings Bylaws set forth as Appendix B and Appendix C, respectively.
The effectiveness of the Reincorporation and the merger contemplated to
result therefrom is conditioned upon the filing by both the Company and
Armor Holdings of Articles of Merger with the State of Florida and a
Certificate of Merger with the State of Delaware. Upon the effective
time of the Reincorporation, each outstanding share of Common Stock and
each share of Common Stock held in the treasury of the Company will be
automatically converted into one share of Common Stock of Armor Holdings.
Outstanding options to purchase shares of Common Stock will be converted
automatically into options to purchase the same number of shares of
Common Stock of Armor Holdings. Each employee stock plan and any other employee
benefit plan to which the Company is a party, whether or not such plan relates
to the Common Stock, will be assumed by Armor Holdings and, to the extent any
such plan provides for the issuance or purchase of Common Stock, it will be
deemed to provide for the issuance or purchase of shares of Common Stock of
Armor Holdings.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE COMPANY TO
EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR CERTIFICATES OF ARMOR HOLDINGS;
OUTSTANDING STOCK CERTIFICATES OF THE COMPANY SHOULD NOT BE DESTROYED OR SENT TO
THE COMPANY. The Common Stock of the Company will continue to be traded on the
American Stock Exchange, which will consider the existing stock certificates as
constituting "good delivery" in transactions subsequent to the Reincorporation.
Principal Reasons For Changing The Company's State Of Incorporation
The Board of Directors of the Company believes that the
Reincorporation will provide flexibility for both the management and business of
the Company. Delaware is recognized both domestically and internationally as a
favorable legal and regulatory environment within which to operate. Such an
environment will enhance the Company's operations and its ability to effect
acquisitions and other transactions. For many years, Delaware has followed a
policy of encouraging incorporation in that state and, in furtherance of that
policy, has adopted comprehensive, modern and flexible corporate laws which are
periodically updated and revised to meet changing business needs. As a result,
many major companies have initially chosen Delaware for their domicile or have
subsequently reincorporated in Delaware. The Delaware courts have developed
considerable expertise in dealing with corporate issues, and a substantial body
of case law has developed construing Delaware law and establishing public
policies with respect to Delaware companies, thereby providing greater
predictability with respect to corporate legal affairs.
Delaware law is more familiar to lenders and investors, and
therefore may provide the Company with a more favorable legal environment in
which to seek additional financing. Because Delaware corporate law is more
predictable and familiar to lenders and investors than is Florida corporate law,
and because Delaware courts have substantially greater experience in handling
matters of a corporate nature, the Board of Directors believes that changing the
Company's domicile from Florida to Delaware would make the Company more
attractive to new and existing shareholders, lenders and investors. The Board of
Directors also believes that the Reincorporation will provide flexibility for
both the management and business of the resulting Company.
The Board of Directors has determined that the most practical and
economical means of reincorporating the Company in the State of Delaware would
be through a reincorporation merger of the Company with and into a wholly-owned
subsidiary of the Company incorporated in Delaware for such purpose. Merger with
a wholly-owned subsidiary is the usual means of reincorporation in another
jurisdiction, since it is inexpensive to accomplish and will qualify as a
tax-free reorganization. Since a reincorporation merger is the usual and most
practical and economical means of reincorporating the Company in Delaware, it
was the only alternative considered by the Board of Directors.
Effects On The Company
Upon the effective date of the Reincorporation, the business and
internal affairs of the Company will be governed by the DGCL. The Armor Holdings
Certificate of Incorporation provides greater limitations on the personal
liability of directors to the Company and its Shareholders and expanded
indemnification provisions. The Reincorporation and the Restructuring discussed
in Proposal No. 4 will not result in a change in the business, assets and
liabilities of the Company. If the Reincorporation Agreement is approved, the
Board of Directors of the Company will be comprised of the same six members
elected at the Meeting to comprise the Company's Board of Directors. The
directors elected in connection with the current Proposal No. 1 for election of
Company directors will serve until the next annual meeting of the Shareholders
of the Company, or until their respective successors are elected and qualified.
The Armor Holdings Bylaws will continue to allow a minimum of three and a
maximum of fifteen directors, as provided for currently in the Company's Charter
and Bylaws. Armor Holdings will also have the same executive officers as did the
Company prior to the Reincorporation.
Capitalization
The Armor Holdings Certificate of Incorporation authorizes the
issuance of 50,000,000 shares of common stock, par value $.01 per share, and
creates a series of preferred stock, with a corresponding right conferred upon
the Board of Directors to set the dividend, voting, conversion and liquidation
rights as well as such redemption or sinking fund provisions of such
preferred stock as the Board may from time to time determine. Currently, the
Company is authorized to issue (i) 15,000,000 shares of Common Stock, par value
$.03 per share, of which 7,261,684 are not issued, and (ii) 1,700,000 shares of
3% Convertible $1.00 stated value Preferred Stock. There are no shares of
Preferred Stock available for issuance because all of such shares were issued in
connection with the Company's Plan of Reorganization and subsequently redeemed
or converted to shares of Common Stock.
The Reincorporation into Delaware will have an effect on the
capital structure of the Company. The change in the par value of the Common
Stock from $.03 per share to $.01 per share will result in a reduction in the
Common Stock of the Company and an increase in its additional paid-in capital.
The preferred stock authorized in the Armor Holdings Certificate of
Incorporation will not have an effect on the Company's capital structure until
such time as the Board of Directors elects to issue such shares.
COMPARATIVE RIGHTS OF SHAREHOLDERS
Upon the effective date of the Reincorporation, holders of the
Common Stock will become holders of Armor Holdings common stock and the rights
of former Company Shareholders will be governed by the Armor Holdings
Certificate of Incorporation, the Armor Holdings Bylaws and the DGCL.
Shareholders should note the following significant differences
between the DGCL and the Florida Business Corporation Act (the "FBCA") as they
affect the rights of shareholders. The following comparison of the DGCL and the
Armor Holdings Certificate of Incorporation and the Armor Holdings Bylaws, on
the one hand, and the FBCA and the Company's existing Charter and Bylaws, on the
other, is not intended to be complete and is qualified in its entirety by
reference to the Armor Holdings Certificate of Incorporation and the Armor
Holdings Bylaws and the Company's Charter and Bylaws. Copies of the Armor
Holdings Certificate of Incorporation and the Armor Holdings Bylaws are attached
hereto as Appendix B and C, respectively. Copies of the Company's existing
Charter and Bylaws are available for inspection at the offices of the Company
and copies will be sent to the holders of the Common Stock upon written or
telephone request.
Distributions To Shareholders
A Delaware corporation may pay dividends out of surplus or, if
there is no surplus, out of net profits for the fiscal year in which declared or
for the preceding fiscal year. A Florida corporation may make distributions to
shareholders as long as, after giving effect to such distribution, the
corporation will be able to pay its debts as they become due in the usual course
of business and the corporation's total assets will not be less than the sum of
its total liabilities plus (unless the articles of incorporation permit
otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
Business Combinations
The FBCA and the DGCL have "Control-Share Acquisitions" and
"Business Combination" statutes, respectively, which are designed to encourage
potential acquirers of publicly traded corporations to obtain the consent and
approval of the proposed target's Board of Directors prior to commencing a
tender offer for the target company's shares. This encouragement is accomplished
by prohibiting or restricting acquirers from undertaking many post-acquisition
financial restructuring alternatives.
The FBCA permits a corporation to opt out of the Control-Share
Acquisition statute. Both the FBCA and the DGCL permit a corporation to opt out
of their respective Business Combination statutes. The Company has opted out of
both the Florida Control-Share Acquisition statute and the Business Combination
statute, and therefore is not governed by the provisions contained therein.
Armor Holdings would be governed by the Control-Share Acquisition and Business
Combination statutes of the DGCL.
Liability and Indemnification of Directors, Officers and Employees
The DGCL and the FBCA both have provisions and limitations
regarding directors' liability and indemnification by a corporation of its
directors, officers and employees.
The DGCL permits a Delaware corporation to include in its
certificate of incorporation a provision which eliminates or limits the personal
liability of a director to the corporation or its shareholders for monetary
damages for breach of fiduciary duties as a director; provided, however, that no
such provision may eliminate or limit the liability of a director: (i) for any
breach of the director's duty of loyalty to the corporation or its shareholders;
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) for declaration of unlawful
dividends or illegal redemptions or stock repurchases; or (iv) for any
transaction from which the director derived an improper personal benefit. The
Armor Holdings Certificate of Incorporation includes such a provision.
Under the DGCL, a director or officer may, in general, be
indemnified by the corporation if he or she has acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
No indemnification is permitted if the person is adjudged liable to the
corporation in a derivative suit unless the court determines that
indemnification would be appropriate.
Under the FBCA, a director is not personally liable for monetary
damages to any person for his actions as a director unless the director breached
his duties by way of: (i) a criminal violation, unless the director has
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful; (ii) a transaction from which the director
derived an improper personal benefit; (iii) declaration of unlawful
distributions; (iv) in a derivative action, conscious disregard by the director
for the best interests of the corporation or willful misconduct by the director;
or (v) in a third party action, recklessness or actions or omissions committed
in bad faith or with malicious purpose or in a manner exhibiting wanton and
willful disregard of human rights, safety or property.
Under the FBCA, a corporation has the power to indemnify any
director, officer, employee or agent of the corporation against liability
incurred in connection with any proceeding, including any appeal, if the
director acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, he had no reasonable cause to believe his conduct
was unlawful. No indemnification is permitted if the person is adjudged liable
unless the court determines that in view of all of the circumstances of the
case, indemnification would be proper. In addition, no indemnification is
permitted for criminal violations (unless the director, officer, employee or
agent had reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful), transactions in which the
director or officer derived an improper personal benefit, declaration of
unlawful dividends or, in derivative actions, willful misconduct or conscious
disregard for the best interests of the corporation.
Calling A Special Meeting Of Shareholders
Under the DGCL, a special meeting of shareholders can be called by
the corporation's board of directors or by such person or persons as may be
authorized by the corporation's certificate of incorporation or bylaws. The
Armor Holdings Certificate of Incorporation does not authorize any person to
call a special meeting of shareholders. The Armor Holdings Bylaws, however,
provide that a special meeting may be called by the Chairman of the Board of
Directors, the President, a majority of the Board of Directors or a majority of
the shareholders of record of all shares entitled to vote.
The FBCA provides that a special meeting of shareholders can be
called by: (i) a corporation's board of directors; (ii) the persons authorized
by the articles of incorporation or bylaws; or (iii) the holders of not less
than 10% of all votes entitled to be cast on any issue to be considered at the
proposed special meeting. A corporation's articles of incorporation can require
a higher percentage of votes, up to a maximum of 50%, to call a special meeting
of shareholders. The Company's Charter does not include any such provision. The
Bylaws of the Company do, however, provide that a special meeting of
Shareholders may be called by the President or a majority of the Board of
Directors.
Amendments To Bylaws
Under the DGCL, directors can amend the bylaws of a corporation
only if such right is expressly conferred upon the directors in its certificate
of incorporation. Under the FBCA, a corporation's board of directors may amend
or repeal the bylaws unless such power is expressly reserved to the shareholders
in the articles of incorporation or the FBCA or the shareholders expressly
provide, in amending or repealing all or any part of the bylaws, that the board
of directors may not amend or repeal the affected bylaws. The Armor Holdings
Certificate of Incorporation permits the Board of Directors to adopt, alter or
amend the Armor Holdings Bylaws. The Company's Charter provides the Board of
Directors with the authority to adopt, alter or amend the Bylaws.
Merger With Subsidiary
Under the DGCL, a parent corporation may merge into a subsidiary
and a subsidiary may merge into its parent, without shareholder approval, where
such parent corporation owns at least 90% of the outstanding shares of each
class of capital stock of its subsidiary. The FBCA permits such a merger of a
subsidiary without shareholder approval if 80% of each class of capital stock of
the subsidiary is owned by the parent corporation.
Removal Of Directors; Filling Vacancies On The Board Of Directors
Under the DGCL, any director or the entire board of directors
generally may be removed, with or without cause, by the holders of a majority of
the shares entitled to vote at an election of directors. Under the FBCA,
shareholders may remove one or more directors with or without cause, unless the
articles of incorporation provide that directors may be removed only with cause,
at a meeting of the shareholders called expressly, at least in part, for that
purpose. The Company's Charter does not refer to removal of directors.
Therefore, any member of the Company's Board of Directors may be removed with or
without cause.
Under the Armor Holdings Bylaws, newly created directorships
resulting from any increase in the number of directors or any vacancies on the
Board of Directors may be filled by the affirmative vote of a majority of the
directors then in office. In addition, the Armor Holdings Bylaws provide that
the directors elected to fill vacancies on the Board of Directors will hold
office until the next election of directors.
The Company's existing Bylaws provide that vacancies on the Board
of Directors will be filled by a majority vote of the remaining members of the
Board of Directors.
Regardless of whether the Reincorporation is effected, there will
be no vacancies on the Board of Directors of either Armor Holdings or the
Company, as the Armor Holdings Certificate of Incorporation and the Company's
Charter each provide for a minimum of three and a maximum of fifteen directors,
and all such directorships shall be filled by Messrs. Kanders, Spiller, Ehrlich,
Sokolow, Strauss and Richmont nominee.
Amendment Or Repeal Of The Certificate
Under the DGCL, unless the certificate of incorporation otherwise
provides, amendments of the certificate of incorporation generally require the
approval of the holders of a majority of the outstanding stock entitled to vote
thereon, and if the amendment would increase or decrease the number of
authorized shares of any class or series or the par value of such shares or
would adversely affect the rights, powers or preferences of such class or
series, a majority of the outstanding stock of such class or series also would
have to approve the amendment. The Armor Holdings Certificate of Incorporation
does not provide otherwise.
Except with regard to minor amendments, all amendments to the
articles of incorporation of a Florida corporation must be approved by a
majority of all the votes entitled to be cast by each voting group, unless the
articles require a greater or lesser vote. The Company's Charter does not
provide for a greater or lesser vote.
Vote Required For Mergers
The FBCA provides that the sale, lease, exchange or disposal of
all, or substantially all, of the assets of a Florida corporation, not in the
ordinary course of business, as well as any merger, consolidation or share
exchange, generally must be recommended by the Board of Directors and approved
by a vote of a majority of the shares of each class of the stock of the
corporation entitled to vote on such matters. Under the FBCA, the vote of the
shareholders of a corporation surviving a merger is not required if: (i) the
articles of incorporation of the surviving corporation will not substantially
differ from its articles before the merger; and (ii) and each shareholder of the
surviving corporation before the effective date will hold the same number of
shares, with identical designations, preferences, limitations and relative
rights immediately after the merger. The DGCL has a similar provision requiring
shareholder approval in the case of the disposition of assets or a merger or a
share exchange.
Stock Redemptions and Repurchases
Both Delaware and Florida corporations may generally purchase or
redeem their own shares of capital stock. Under the DGCL, a Delaware corporation
may purchase or redeem its own shares of capital stock except when the capital
of the corporation is impaired or when such purchase or redemption would cause
any impairment of the capital of the corporation. Subject to any restrictions
imposed by its articles of incorporation (the Company's Charter contains no such
restriction), a Florida corporation may make distributions to shareholders as
long as, after giving effect to such distribution: (i) the corporation would be
able to pay its debts as they become due in the usual course of business; and
(ii) the corporation's total assets would not be less than the sum of its total
liabilities plus, unless the articles of incorporation permit otherwise, (which
the Company's Charter does not) the amount that would be needed if the
corporation were to be dissolved at the time of the distribution to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the distribution (the Company currently has no
shares authorized or outstanding with such preferential rights).
Shareholder Records
Under both the DGCL and the FBCA, any Shareholder with a proper
purpose may inspect and copy the books, records and stockholder lists of the
Company.
Corporate Action Without A Shareholder Meeting
The DGCL and the FBCA both permit corporate action without a
meeting of shareholders upon the written consent of the holders of that number
of shares necessary to authorize the proposed corporate action being taken,
unless the certificate of incorporation or articles of incorporation,
respectively, expressly provide otherwise. In the event such proposed corporate
action is taken without a meeting by less than the unanimous written consent of
shareholders, the DGCL requires that prompt notice of the taking of such action
be sent to those shareholders who have not consented in writing. The FBCA
provides that such notice must be given within ten days of the date such
shareholder authorization is granted.
Rights And Options
The DGCL and the FBCA do not require shareholder approval of such
plans, although various other applicable legal requirements, such as the rules
of the SEC, may make shareholder approval of certain rights or option plans
necessary or desirable.
PURPOSES AND EFFECTS OF CERTAIN PROVISIONS OF THE
CERTIFICATE OF INCORPORATION AND BYLAWS OF ARMOR HOLDINGS
Limitation Of Director, Officer and Employee Liability
The Armor Holdings Certificate of Incorporation contains a
provision in Article Ninth that provides for the indemnification by the Company
of any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that he is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The Armor Holdings Certificate of Incorporation also
provides that the Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in manner he reasonably
believed to be in or not opposed to the best interests of the Company. As they
relate to directors, these two provisions eliminate a director's liability for
monetary damages for breaches of fiduciary duty of care, subject to certain
exceptions described below (the "Liability Provisions").
The Delaware legislature enacted an amendment to the DGCL in 1985
allowing provisions such as the Liability Provisions as a response to changes in
the market for directors' liability insurance. The proliferation of shareholder
derivative and class action suits for breaches of directors' fiduciary duties
has in large part made it difficult to obtain liability insurance. Thus, the
Delaware legislature amended the DGCL in order to maintain qualified and able
directors to govern companies.
The Liability Provisions do not relieve a director of monetary
liability for breaches of the duty of loyalty, acts or omissions not in good
faith or involving intentional misconduct or knowing violations of law, the
unlawful repurchase or redemption of stock or payment of unlawful dividends or
any transaction from which a director derives an improper personal benefit.
Thus, liability for monetary damages will still exist under the Liability
Provisions if liability is based upon one of these grounds. The Liability
Provisions will have no effect on the availability of equitable remedies, such
as an injunction or rescission for the breach of a director's fiduciary duty,
and will in no way limit or otherwise affect liability for violation of the
federal securities laws.
The Liability Provisions do not eliminate the liability of
directors of the Company for monetary damages arising out of the directors'
breach of their fiduciary duty of care. The duty of care refers to the fiduciary
duty of directors to be sufficiently diligent and careful in considering a
transaction or taking or refusing to take some corporate action. Liability for a
breach of the duty of care arises when directors have failed to exercise
sufficient care in reaching decisions and otherwise attending to their
responsibilities as directors. The Liability Provisions do not eliminate the
duty of care; they only eliminate monetary damage awards occasioned by a breach
of that duty in certain circumstances. Thus a breach of the duty of care remains
a valid basis for a suit seeking to stop a proposed transaction from occurring.
After the transaction has occurred, however, except in certain limited
circumstances, the shareholders would no longer have a claim for monetary
damages based on a breach of the duty of care even if that breach involved gross
negligence on the part of the directors.
Accounting Treatment of Reincorporation
Federal Tax Consequences
The merger which will take place in connection with the
Reincorporation should, under current law, constitute a tax-free reorganization
under Section 368 of the Internal Revenue Code of 1986, as amended (the "Code").
No ruling has been or is expected to be requested from the Internal Revenue
Service ("IRS") as to the tax consequences of the Reincorporation. Since no
ruling has been obtained, no assurance can be given that the IRS will agree with
the conclusions of the Company's tax advisors or that a challenge by the IRS, if
made, will not be successful.
Assuming that the Reincorporation and the merger resulting
therefrom constitute a tax-free reorganization, there will be no adverse federal
income tax consequences to the Company or its Shareholders because no gain or
loss will be recognized to the Company or Armor Holdings as a result of the
Reincorporation. Shareholders will have the same tax basis in the shares of
Armor Holdings received in this transaction as the basis in the shares of the
Company exchanged therefor, and the holding period of the shares of Armor
Holdings will include the period during which the shares of the Company were
held, provided such shares of the Company were held as capital assets on the
effective date of the Reincorporation.
The foregoing summary of federal income tax consequences is
included for general information only and does not address the federal income
tax consequences to all holders, including those who acquired shares of Common
Stock pursuant to the exercise of employee stock options or otherwise as
compensation and those subject to the alternative minimum tax. In view of the
individual nature of tax consequences, Shareholders are urged to consult their
own tax advisors as to the specific tax consequences of the Reincorporation,
including the application and effect of state, local and foreign income and
other tax laws.
Amendment
The Reincorporation Agreement may be amended, modified or
supplemented prior to the effective time of the Reincorporation upon the
approval of the Board of Directors of the Company and Armor Holdings. However,
no amendment, modification or supplement may be made after the adoption of the
Reincorporation Agreement by the Shareholders of the Company which changes the
Reincorporation Agreement in a way which, in the judgment of the Board of
Directors of the Company, would have a material adverse effect on the
Shareholders of the Company, unless such amendment, modification or supplement
is approved by such Shareholders.
Termination
The Reincorporation Agreement provides that the Board of Directors
of the Company may terminate the Reincorporation Agreement and abandon the
merger contemplated thereby at any time prior to its effective time, whether
before or after approval by the Shareholders of the Company, if: (i) the
Reincorporation shall not have received the requisite approval of the
Shareholders of the Company; (ii) the Board of Directors of the Company
determines for any reason in its sole judgment that the consummation of the
transaction would be inadvisable or not in the best interests of the Company
and its Shareholders or; (iii) the Company shall not have received all
required third party consents, including, but not limited to, the consent of the
Bankruptcy Court, if required, and the Board of Directors determines that such
failure will have a material adverse effect on the Company if the
Reincorporation is consummated.
Vote Required
The affirmative vote of the holders of a majority of the
outstanding shares of the Company's Common Stock is required for the approval of
the Reincorporation of the Company under the FBCA.
Recommendation Of The Board Of Directors
The Board of Directors has adopted and recommends a vote FOR
Proposal No. 3 on the Proxy Card.
PROPOSAL NO. 4
PLAN OF INTERNAL RESTRUCTURING
Introduction
The Company is incorporated under the laws of the State of
Florida. Its corporate headquarters are in Yulee, Florida. The Company is
engaged in the development, manufacture and distribution of bullet and
projectile resistant garments. These include bullet resistant and sharp
instrument penetration resistant vests, bullet resistant blankets, bomb disposal
suits and helmets, bomb protection and disposal equipment and load bearing
vests. In addition to these products, the Company develops, manufactures and
distributes other ballistic protection and security equipment, including
explosive ordnance device ("EOD") handling and detection equipment, EOD
suppression and disposal equipment, helmets, face masks, shields, hard armor
ballistic plates, customized armor for vehicles and other custom armored
products.
The Company operates as an operating entity -- holding all of its
assets and conducting all operations directly.
The Board of Directors has determined that it would be in the best
interests of the Company and its Shareholders for the Board of Directors to have
the flexibility to transfer some or substantially all of the Company's operating
assets to one or more wholly-owned subsidiaries, with the result that the
Company would become a holding company (the "Restructuring"). Toward this end,
the Board of Directors has approved a plan of restructuring (the "Restructuring
Plan") providing for the transfer of substantially all of the Company's
operating assets and liabilities to one or more wholly-owned subsidiaries that
the Company will incorporate for such purpose. The Company intends to
incorporate two subsidiary corporations in Delaware. One subsidiary, Armor
Holdings, will be used to effect the Reincorporation discussed in Proposal No.
3. The Company will transfer into the second subsidiary, American Body Armor &
Equipment, Inc., a Delaware corporation ("ABA-DE"), all of the Company's
operating assets and liabilities either before or after the Reincorporation is
effected. After the effective date of the Reincorporation, ABA-DE will become a
subsidiary of Armor Holdings.
The following chart sets forth the organizational structure of the
Company before, during and after the proposed Restructuring:
CURRENT STRUCTURE
American Body Armor & Equipment, Inc.,
a Florida corporation (the "Company")
(100% of Company's operating revenues)
(No subsidiaries)
PROPOSED INTERIM STRUCTURE
American Body Armor & Equipment, Inc.,
a Florida corporation (the "Company")
(100% of Company's operating revenues)
Armor Holdings, Inc., ABA-DE
a Delaware corporation a Delaware corporation
(Subsidiary) (Subsidiary)
PROPOSED STRUCTURE
Armor Holdings, Inc.,
a Delaware corporation (the "Company")
(Holding company)
ABA-DE
a Delaware corporation
(Operating company)
(100% of Company's consolidated operating revenues)
The implementation of the Restructuring Plan will not have a
material effect on the consolidated financial statements of the Company, nor
will it alter Shareholders' percentage ownership interests. Consummation of the
Restructuring will not affect the voting rights and dividend and liquidation
rights of the Shareholders. If the Shareholders approve the Restructuring Plan
and the Company obtains all required third party consents, including, but not
limited to, the consent of the Bankruptcy Court, if required, the Board of
Directors may choose to implement the entire plan or a portion of the plan, or
the Board of Directors may elect not to implement the plan at all if it
determines that the costs or other considerations relating to the implementation
of the Restructuring Plan outweigh the benefits to be gained by the
Restructuring.
The submission of the Restructuring Plan to Shareholders is not
intended to affect the Company's right under applicable Delaware law (if
Proposal No. 3 is approved), or Florida law (if Proposal No. 3 is not approved)
to dispose of less than all or substantially all of its assets without
Shareholder approval except as restricted by the Company's Charter. If in the
event the Restructuring Plan is not approved by the Shareholders but all
required third party consents are obtained, including, but not limited to, the
consent of the Bankruptcy Court, if required, the Company may nevertheless, from
time to time in the future, transfer portions of its assets to subsidiaries or
to third parties on terms and for consideration approved by the Board of
Directors, subject to applicable Delaware or Florida law, as the case may be,
and certain restrictions in the Company's Charter, without seeking Shareholder
approval. Approval of the Restructuring Plan will not preclude any Shareholder's
right to challenge any future dispositions by the Company of the assets of the
Company (including the stock of any subsidiaries), if such dispositions are not
made in compliance with applicable law.
Reasons For The Restructuring
The new structure of the Company and its subsidiaries will permit
greater flexibility in the management and financing of new and existing business
operations. The holding company structure will also provide the Company with
greater flexibility to expand in the future through acquisitions of companies
which may be strategically advantageous to the Company's long-term growth.
Moreover, the Board of Directors believes that the holding company structure is
better suited to the development of the Company's international business. The
Board of Directors also believes that the line-of-business restructuring could
further the objective of operating the Company's businesses on a more
self-sufficient, independent economic basis. In addition, the holding company
structure could permit improved delineation of administrative and other
responsibilities within the corporate structure because it will permit a
designated group of executive employees to concentrate their efforts on the
concerns of the consolidated enterprise as a whole, while allowing the
subsidiaries and subsidiary management to focus on subsidiary-specific
objectives. This will enable the Company to further link executive compensation
to Company performance, thereby providing for better accountability.
Effect On Shareholders' Rights
The outstanding stock of the Company will not be affected by the
proposed Restructuring. Consummation of the Restructuring Plan will not affect
the voting, dividend, liquidation rights or ownership interests of the
Shareholders.
The Shareholders of the Company will not directly elect the
directors of the operating subsidiaries. Directors of the subsidiaries are
elected by the Board of Directors of the Company, with the Company being the
sole stockholder of the subsidiaries. The overall management of the affairs and
operations of the Company will continue to be under the direction of the Board
of Directors.
The Company has no present intention to cause any subsidiary which
may be formed to make a further transfer of assets to any affiliate of the
Company (other than other wholly-owned subsidiaries) or to any unrelated third
party. The Company does not intend to seek Shareholder approval of any
subsequent dispositions of assets by a subsidiary or the stock of any subsidiary
unless such assets or stock to be transferred constitute all or substantially
all of the assets of the Company and its subsidiaries taken as a whole and where
Shareholder approval is required by law. In the event that the Company proposes
to make a disposition of the stock of any of its subsidiaries, or if any
subsidiary disposes of its assets, the Company will seek Shareholder approval
for such transaction if required to do so by law or if the stock or assets
involved constitute substantially all of the assets of the Company and its
subsidiaries taken as a whole.
Effect On Company's Financial Statements
The implementation of the Restructuring Plan will not have a
material effect on the financial statements of the Company. The Restructuring
will, however, cause the Company to begin reporting its financial
operations and conditions on a consolidated basis.
Other Effects On The Company And Its Shareholders
Except for the structural changes, consummation of the
Restructuring Plan is not expected to result in any material change in the
overall operation of the Company or location of its facilities. Similarly, the
Restructuring will not result in any changes in the current membership of the
Board of Directors of the Company, and the officers of the Company will remain
in place after consummation of the Restructuring. In addition, some persons
who are currently serving as officers of the Company may become officers or
directors of one or more of the subsidiaries.
While the transactions presently contemplated under the
Restructuring Plan do not create a conflict of interest between the Company and
any of its Shareholders, in the event that any of the subsidiaries, through
public or private sale, should be owned in part by persons other than the
Company, such conflicts could arise. The Company has no present intention to
effect a public or private sale of a part of the ownership of any of its
subsidiaries.
If the Restructuring Plan is consummated, the Company will retain
administrative functions and related assets, as well as a core group of senior
management officers and employees.
Transfer Of Assets
All of the Company's operations are conducted directly by the
Company. If the Restructuring Plan is implemented as contemplated, all of the
assets and liabilities of the Company's business would be transferred to one or
more wholly-owned subsidiaries.
Disadvantages Of Restructuring
The Board of Directors believes that the disadvantages of the
Restructuring are not significant or material and will be offset by both the
increased focus on asset utilization and responsibility. Possible disadvantages
of the Restructuring include a possible small increase in accounting and
administrative costs and possible duplication of some administrative functions.
As previously noted, the Shareholders of the Company will elect
the directors of the Company, who will have overall responsibility for the
management of the Company and its subsidiaries. The Shareholders' statutory
right to inspect the books, records and shareholder lists of the Company under
applicable Delaware and Florida law may not extend to the books and records of
the operating subsidiaries.
Tax Consequences Of The Restructuring
It is currently contemplated that any assets transferred pursuant
to the Restructuring Plan will be conveyed to the subsidiary or subsidiaries on
a tax-free basis pursuant to Section 351 of the Internal Revenue Code of 1986,
as amended.
Vote Required
The affirmative vote of holders of a majority of the outstanding
shares of the Company's Common Stock is required for the ratification of the
Restructuring Plan under the FBCA.
Recommendation of the Board of Directors
The Board of Directors has adopted and recommends a vote FOR
Proposal No. 4 on the Proxy Card.
PROPOSAL NO. 5
AMENDMENT TO CHARTER
TO INCREASE AUTHORIZED COMMON STOCK
On March 4, 1996 the Board of Directors unanimously approved and
recommends that the Company's Shareholders consider and approve an amendment to
Article IV of the Company's Charter that would increase the number of authorized
shares of the Company's Common Stock from 15,000,000 shares to 50,000,000
shares. If Proposal No. 3 is approved by the Shareholders and all required third
party consents related thereto are obtained, upon appropriate further action
taken by the Board of Directors and executive officers of the Company, the
increase in the number of authorized shares of Common Stock will happen
automatically, as the Certificate of Incorporation of Armor Holdings, the
wholly-owned subsidiary of the Company into which the Company proposes to merge
pursuant to Proposal No. 3, will permit the surviving corporation to issue
50,000,000 shares of common stock. The Armor Holdings Certificate of
Incorporation will become the charter of the entity surviving the merger of
Armor Holdings and the Company.
As of the Record Date, the Company had 6,825,835 shares of Common
Stock outstanding. In addition, as of the Record Date, 912,481 shares of Common
Stock were reserved for issuance upon conversion of outstanding stock options
and grants under the Company's existing stock option plans. Accordingly, as of
the Record Date there were an aggregate of 7,261,684 authorized shares of Common
Stock unissued, unreserved for issuance and otherwise available for issue by the
Company.
The proposed increase in the authorized Common Stock has been
recommended by the Board of Directors to assure that an adequate supply of
authorized, unissued shares is available for general corporate needs and to
provide the Board of Directors with the necessary flexibility to issue stock in
connection with acquisitions, merger transactions or financings without the
expense and delay incidental to obtaining Shareholder approval of an amendment
to the Charter at the time of such action, except as may be required for a
particular issuance by applicable law or by the rules of any stock exchange on
which the Company's securities may then be listed. The additional authorized
shares of Common Stock may be used for such purposes as raising additional
capital or the financing of an acquisition or business combination. Such shares
would, however, be available for issuance without further action by the
Shareholders, unless required by applicable law.
The additional shares of Common Stock for which authorization is
sought would be identical to the shares of the Common Stock of the Company now
authorized, except that the par value of all shares of the Company's Common
Stock, both issued and outstanding and unissued, will be changed to $.01 per
share. Holders of Common Stock do not have preemptive rights to subscribe for
additional securities which may be issued by the Company. The issuance of
additional shares of Common Stock may, among other things, have a dilutive
effect on the earnings per share and on the equity and voting power of existing
holders of Common Stock and may adversely affect the market price of the Common
Stock.
Although the Board of Directors has no present intention of
issuing additional shares for such purposes, the proposed increase in the number
of authorized shares of Common Stock could enable the Board of Directors to
render more difficult or discourage an attempt by another person or entity to
obtain control of the Company. Such additional shares could be issued by the
Board of Directors in a public or private sale, merger or similar transaction,
increasing the number of outstanding shares and thereby diluting the equity
interest and voting power of a party attempting to obtain control of the
Company. The increase in the authorized shares of Common Stock has not, however,
been proposed for an anti-takeover-related purpose and the Company has no
knowledge of any current efforts to obtain control of the Company or to effect
large accumulations of its Common Stock. Certain provisions of the Bylaws of
both the Company and Armor Holdings relating to the calling of special
shareholders meetings could also have the effect of deterring takeover attempts
because of the procedural provisions contained therein.
This Proposal No. 5 is not part of any plan by the Company to
adopt a series of amendments to its Charter or Bylaws so as to render the
takeover of the Company more difficult. Moreover, the Company is not submitting
this Proposal to enable it to frustrate any efforts by another party to acquire
a controlling interest or to seek representation on the Board of Directors.
The Board of Directors believes that the proposed amendment to
Article IV of the Charter will provide several long-term advantages to the
Company and its Shareholders. The passage of this Proposal might enable the
Company to pursue acquisitions or enter into transactions which the Board of
Directors believes provide the potential for growth and profit. If additional
authorized shares are available, transactions dependent upon the issuance of
additional shares will be less likely to be undermined by delays and
uncertainties occasioned by the need to obtain Shareholder authorization to
provide for the shares necessary to consummate such transactions. The
consummation of such transactions do not generally require the approval of
Shareholders, however where the issuance of additional shares of Common Stock
could, in the aggregate, equal or exceed 20% of the then outstanding shares of
Common Stock of the Company, Shareholder approval is required. The ability to
issue shares, as the Board of Directors determines from time to time to be in
the Company's best interests, will also permit the Company to avoid the extra
expenses which would be incurred in holding special Shareholders meetings solely
to approve an increase in the number of shares which the Company has the
authority to issue.
If this Proposal and Proposal No. 6 are adopted, the Charter will
be amended to delete Article IV in its entirety and replace the same with the
following:
"ARTICLE IV.
The aggregate number of shares of capital stock which the
corporation shall have authority to issue is: Fifty-Five
Million (55,000,000) shares of the par value of one cent
($.01) each, divided into (a) Fifty Million (50,000,000)
shares of common stock (the "Common Stock") and (b) Five
Million (5,000,000) shares of preferred stock (the "Preferred
Stock"). No holder of shares of stock of any class shall be
entitled as a matter of right to subscribe for or purchase or
receive any part of any new or additional issue of shares of
stock of any class or of securities convertible into shares of
stock of any class, whether now or hereafter authorized or
whether issued for money, for consideration other than money,
or by way of dividend. The powers, designations, preferences
and rights (and the qualifications, limitations and
restrictions thereof) in respect of the Common Stock and
the Preferred Stock are as follows:
(a) Common Stock: Holders of shares of Common Stock shall
be entitled to cast one vote for each share held at all
shareholders' meetings for all purposes, including the
election of directors. The Common Stock does not have
cumulative voting rights.
(b) Preferred Stock: The Board of Directors shall have
the authority to establish, by resolution, all powers,
designations, preferences and rights (and the
qualifications, limitations and restrictions thereof), of
the Preferred Stock, including, without limitation, the
following:
(i) the rate and times at which and the other
conditions on which dividends on the shares of
Preferred Stock may be declared and paid or set aside
for payment; whether the shares of Preferred Stock
shall be entitled to any participating or other
dividends in addition to dividends at the rate so
determined and, if so, on what terms; and whether
dividends shall be cumulative and, if so, from what
date or dates and on what terms; provided, however,
that no dividend on the shares of Preferred Stock
shall be declared except out of (A) the earned
surplus of the corporation or (B) the net profits of
the corporation for the fiscal year in which the
dividend is declared;
(ii) whether or not the shares of Preferred
Stock shall have voting rights in addition to the
voting rights provided by law and, if so, the terms
and conditions thereof, including the date or dates
or event or events upon or after which they shall
have such voting rights;
(iii) whether nor not the shares of Preferred
Stock shall be redeemable and, if so, the terms and
conditions, if any, upon which they shall be
redeemed, including the date or dates or event or
events upon or after which they shall be redeemable,
the cash or property for which they shall be
redeemed, whether they shall be redeemable at the
option of the holder or the corporation, or both,
events and the amount or rate of cash or property per
share payable in case of redemption, which amount may
vary under different conditions and at different
redemption dates; and
(iv) the amounts payable upon the shares of
Preferred Stock in the event of voluntary or
involuntary liquidation, dissolution, winding up or
distribution of the assets of the corporation.
However, if Proposal No. 3 is adopted, the increase in the authorized
shares of Common Stock will happen without the need for an amendment to the
Charter as the Certificate of Incorporation of Armor Holdings authorizes
50,000,000 shares of Common Stock. The shares of Common Stock authorized by
Armor Holdings will be the same as the Common Stock of the Company, except that
the par value would change from $.03 per share to $.01 per share.
Market Price Data
The Common Stock of the Company is traded on the American Stock
Exchange under the symbol "ABE". On ________ __, 1996, the last full trading
date prior to the printing and mailing of this Proxy Statement, the reported
closing price for the Common Stock on the American Stock Exchange was
$_________. Shareholders are urged to obtain the current market quotation for
the shares of the Company's Common Stock.
Vote Required
The affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock is required to approve this Proposal No. 5.
Recommendation of the Board of Directors
The Board of Directors has adopted and recommends that the Shareholders
vote FOR Proposal No. 5 on the Proxy Card.
PROPOSAL NO. 6
AMENDMENT TO THE CHARTER
TO AUTHORIZE SERIES OF PREFERRED STOCK
On March 4, 1996 the Board of Directors unanimously approved and
recommends that the Company's Shareholders consider and approve an amendment to
Article IV of the Company's Charter that would authorize a series of preferred
stock, par value $.01 per share, with a right conferred upon the Board of
Directors to set the dividend, voting, conversion and liquidation rights as well
as such redemption or sinking fund provisions of such preferred stock as they
may determine from time to time (the "New Preferred Stock"). If the Shareholders
approve this Proposal No. 6, the number of shares of New Preferred Stock
available for issuance would be 5,000,000 shares. If Proposal No. 3 is approved
by the Shareholders and all required third party consents related thereto are
obtained, upon appropriate further action taken by the Board of Directors and
executive officers of the Company, the creation of the New Preferred Stock will
happen automatically, as the Certificate of Incorporation of Armor Holdings, the
wholly-owned subsidiary of the Company into which the Company proposes to merge
pursuant to Proposal No. 3, provides for the creation of the New Preferred
Stock. The Armor Holdings Certificate of Incorporation will become the charter
of the entity surviving the merger of Armor Holdings and the Company.
Under its existing Charter, the Company is authorized to issue
1,700,000 shares of 3% Convertible, $1.00 stated value Preferred Stock (the "Old
Preferred Stock"). Such shares of Old Preferred Stock, which were issued and
subsequently redeemed or converted to shares of Common Stock as part of the
Company's Plan of Reorganization, are governed by certain rights and preferences
contained in the Charter which may not accommodate the Company's future needs.
As of the Record Date, the Company had no shares of Old Preferred Stock
outstanding. In addition, as of the close of business on the Record Date, there
were no shares of Old Preferred Stock reserved for issuance upon conversion of
outstanding stock options under the Company's existing stock option plans or
upon the exercise of certain conversion rights under other agreements which have
been entered into by the Company.
The creation of the New Preferred Stock has been recommended by the
Board of Directors to assure that an adequate supply of authorized, unissued
shares is available for general corporate needs and to provide the Board of
Directors with the necessary flexibility to issue preferred stock in connection
with acquisitions, merger transactions or financings without the expense and
delay incidental to obtaining shareholder approval of an amendment to the
Charter at the time of such action, except as may be required for a particular
issuance by applicable law or by the rules of any stock exchange on which the
Company's securities may then be listed. Although the New Preferred Stock may be
used for such purposes as raising additional capital or the financing of an
acquisition or business combination, the Company currently has no plans or
arrangements related to the issuance of any of the New Preferred Stock proposed
to be authorized by the amendment to the Charter. Such shares would, however, be
available for issuance without further action by the Shareholders, unless
required by applicable law. There is no public trading market for the Old
Preferred Stock, nor would there be a public trading market for the New
Preferred Stock until such time as a registration statement filed by the Company
with the SEC became effective, or an exemption from registration under
Regulation S of the Securities Act of 1933, as amended (the "1933 Act"), became
applicable. The Company does not presently contemplate registering the shares of
New Preferred Stock under the 1933 Act nor does it contemplate seeking an
exemption from registration under said act.
The shares of New Preferred Stock for which authorization is sought
would not be identical to the shares of the Old Preferred Stock of the Company
now authorized. If authorized, the New Preferred Stock may be issued in one or
more series, the terms of which may be determined at the time of issuance by the
Board of Directors, without further action by the Shareholders, and may include
voting rights (including the right to vote as a series on particular matters),
preferences as to dividends and liquidation, conversion and redemption rights
and sinking fund provisions. All shares of Old Preferred Stock were issued
pursuant to the Plan of Reorganization and subsequently redeemed or converted to
shares of Common Stock. Consequently, there are no shares of Old Preferred Stock
issued and outstanding nor are such shares available for reissuance. The
issuance of any New Preferred Stock could affect the rights of the holders of
Common Stock and therefore reduce the value of the Common Stock and make it less
likely that holders of Common Stock would receive a premium upon a sale of their
shares of Common Stock. In particular, specific rights granted to future holders
of New Preferred Stock could be issued to restrict the Company's ability to
merge with or sell its assets to a third party, which could have the effect of
delaying or preventing a change of control of the Company and may adversely
affect the rights of holders of Common Stock.
This Proposal No. 6 is not part of any plan by the Company to adopt a
series of amendments to its Charter or Bylaws so as to render the takeover of
the Company more difficult. Moreover, the Company is not submitting this
Proposal to enable it to frustrate any efforts by another party to acquire a
controlling interest or to seek representation on the Board of Directors.
The Board of Directors believes that the proposed amendment to Article
IV of the Charter will provide several long-term advantages to the Company and
its Shareholders. The passage of this Proposal might enable the Company to
pursue acquisitions or enter into transactions which the Board of Directors
believes provide the potential for growth and profit. If the shares of New
Preferred Stock are available, transactions dependent upon the issuance of
preferred stock will be less likely to be undermined by delays and uncertainties
occasioned by the need to obtain Shareholder authorization for the New Preferred
Stock prior to consummation of such transactions. The consummation of such
transactions do not generally require the approval of Shareholders, however
where the issuance of shares of New Preferred Stock which are convertible into
shares of Common Stock could result in an increase of 20% or more of the then
outstanding shares of Common Stock, Shareholder approval is required. The
ability to issue shares of preferred stock, as the Board of Directors determines
from time to time to be in the Company's best interests, will also permit the
Company to avoid the extra expenses which would be incurred in holding special
Shareholders meetings solely to approve the creation of one or more series of
preferred stock.
If this Proposal and Proposal No. 5 are adopted, the Charter will be
amended to delete Article IV in its entirety and replace the same with the
following:
"ARTICLE IV.
The aggregate number of shares of capital stock which the
corporation shall have authority to issue is: Fifty-Five Million
(55,000,000) shares of the par value of one cent ($.01) each,
divided into (a) Fifty Million (50,000,000) shares of common stock
(the "Common Stock") and (b) Five Million (5,000,000) shares of
preferred stock (the "Preferred Stock"). No holder of shares of
stock of any class shall be entitled as a matter of right to
subscribe for or purchase or receive any part of any new or
additional issue of shares of stock of any class or of securities
convertible into shares of stock of any class, whether now or
hereafter authorized or whether issued for money, for
consideration other than money, or by way of dividend. The powers,
designations, preferences and rights (and the qualifications,
limitations and restrictions thereof) in respect of the Common
Stock and the Preferred Stock are as follows:
(a) Common Stock: Holders of shares of Common Stock shall be
entitled to cast one vote for each share held at all shareholders' meetings for
all purposes, including the election of directors. The Common Stock does not
have cumulative voting rights.
(b) Preferred Stock: The Board of Directors shall have the
authority to establish, by resolution, all powers, designations, preferences
and rights (and the qualifications, limitations and restrictions thereof), of
the Preferred Stock, including, without limitation, the following:
(i) the rate and times at which and the other
conditions on which dividends on the shares of
Preferred Stock may be declared and paid or set aside
for payment; whether the shares of Preferred Stock
shall be entitled to any participating or other
dividends in addition to dividends at the rate so
determined and, if so, on what terms; and whether
dividends shall be cumulative and, if so, from what
date or dates and on what terms; provided, however,
that no dividend on the shares of Preferred Stock
shall be declared except out of (A) the earned
surplus of the corporation or (B) the net profits of
the corporation for the fiscal year in which the
dividend is declared;
(ii) whether or not the shares of Preferred Stock
shall have voting rights in addition to the voting
rights provided by law and, if so, the terms and
conditions thereof, including the date or dates or
event or events upon or after which they shall have
such voting rights;
(iii) whether nor not the shares of Preferred Stock
shall be redeemable and, if so, the terms and
conditions, if any, upon which they shall be
redeemed, including the date or dates or event or
events upon or after which they shall be redeemable,
the cash or property for which they shall be
redeemed, whether they shall be redeemable at the
option of the holder or the corporation, or both,
events and the amount or rate of cash or property per
share payable in case of redemption, which amount may
vary under different conditions and at different
redemption dates; and
(iv) the amounts payable upon the shares of
Preferred Stock in the event of voluntary or
involuntary liquidation, dissolution, winding up or
distribution of the assets of the corporation.
However, if Proposal No. 3 is adopted, the authorization of the New
Preferred Stock will happen without the need for an amendment to the Charter as
the Certificate of Incorporation of Armor Holdings authorizes the New Preferred
Stock.
Market Price Data
There is no public trading market for the Old Preferred Stock of the
Company, nor will there be a public trading market for the New Preferred Stock
until such time as a registration statement filed by the Company with the SEC
becomes effective, or an exemption from registration under Regulation S of the
Securities Act of 1933, as amended (the "1933 Act"), became applicable. The
Company does not presently contemplate registering the shares of New Preferred
Stock under the 1933 Act nor does it contemplate seeking and exemption from
registration under said act. The Company's Common Stock is traded on the
American Stock Exchange under the symbol "ABE".
Vote Required
The affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock is required to approve this Proposal No. 6.
Recommendation of the Board of Directors
The Board of Directors has adopted and recommends that the Shareholders
vote FOR Proposal No. 6 on the Proxy Card.
PROPOSAL NO. 7
ADOPTION OF THE 1996 STOCK OPTION PLAN
At the Meeting, Shareholders will be asked to consider and act upon a
proposal to adopt the Company's 1996 Stock Option Plan (the "1996 Plan").
1996 Stock Option Plan
On March 4, 1996, the Board of Directors of the Company adopted the
1996 Plan, subject to Shareholder approval at the Meeting. The Board of
Directors believes that stock options and other stock-based awards are desirable
(1) as an effective incentive for participating key employees, consultants and
Directors (collectively, "Participants") to use their judgment, initiative
and efforts to ensure the successful conduct of the Company's business,
(2) to further align such Participants' interests with those of the
Company's Shareholders by providing an opportunity to increase their stock
ownership and (3) to encourage such Participants to remain in the service
of the Company. Pursuant to the 1996 Plan, Participants may be granted
stock options ("Options"), which may be incentive stock options ("Incentive
Options") or non-qualified stock options ("Non-Qualified Options"). The
following description of the 1996 Plan is not intended to be complete and is
qualified in its entirety by the complete text of the 1996 Plan set forth in
Appendix D to this Proxy Statement.
If the 1996 Plan is approved by Shareholders, the total number of
Options authorized under the 1996 Plan will be 1,500,000 shares (which number is
subject to adjustment in the event of stock dividends, stock splits and other
similar events) of the Company's Common Stock. To the extent that Options
granted under the 1996 Plan expire or terminate without having been exercised,
the shares of the Company's Common Stock covered by such Options will again
become available for award.
The maximum number of shares of Common Stock subject to any
Option which may be granted under the 1996 Plan to Participants shall
not exceed 100,000 shares (subject to certain increases or decreases
during each fiscal year of the Company) during the entire term of the
1996 Plan. To the extent that shares of Common Stock for which Options
are permitted to be granted to a Participant during a fiscal year are
not covered by a grant of an Option to a Participant issued in such
fiscal year, such shares of Common Stock shall automatically increase
the number of shares available for grant of Options to such Participant
in the subsequent fiscal years during the term of the 1996 Plan.
If the 1996 Plan is approved by Shareholders, the Compensation
Committee of the Board of Directors (the "Compensation Committee") will have
authority to administer the 1996 Plan although, under certain conditions, the
Board of Directors shall have the power to administer the 1996 Plan. The
Compensation Committee must consist of no fewer than two members, each of whom
is a "disinterested person" within the meaning of Rule 16b-3 of the Exchange
Act. The Compensation Committee will have the authority to determine the
employees to whom Options will be granted, the time when such Options shall be
granted, the number of shares which shall be subject to each Option (subject to
certain limitations in the case of Incentive Options), the purchase price or
exercise price of each Option (no less than 100% of fair market value for
Incentive Options), the period(s) during which such Options shall be exercisable
(whether in whole or in part) (no more than ten years for Incentive Options) and
the other terms and provisions thereof. Generally, Options may be granted only
to employees employed and consultants engaged by the Company or of any
subsidiary corporation or parent corporation of the Company. Directors who are
also employees of the Company are also eligible to participate. Consultants are
eligible to receive awards of Non-Qualified Options, but are not eligible to
receive Incentive Options. No person who owns, directly or indirectly, at
the time of the granting of an Incentive Option to him, 10% or more of the total
combined voting power of all classes of stock of the Company will be eligible to
receive any Incentive Options under the 1996 Plan unless the option price is at
least 110% of the fair market value of the Common Stock subject to the option,
determined on the date of grant.
Common Stock purchased on the exercise of Options may be paid for in
cash or by certified check, or with shares of the Company's Common Stock (if
permitted by the terms of the Option and by applicable law) or by payment on
such terms as the Compensation Committee shall determine.
The Compensation Committee shall have the option to at any time suspend
or terminate the 1996 Plan, if such plan is approved by the Shareholders,
provided that rights and obligations under any Option granted while the 1996
Plan is in effect may not be altered or impaired by suspension or termination of
the 1996 Plan, except with the consent of the holder thereof.
The Board of Directors or the Compensation Committee, as the
case may be, shall have the right, from time to time, to amend the 1996
Plan, provided that no amendment shall be made without the approval of
the Shareholders to the extent required by Rule 16b-3 or for the
exception for performance-based compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") that will: (i)
increase the total number of shares reserved for Options under the 1996
Plan (other than an increase resulting from certain adjustments); (ii)
reduce the exercise price of any Option granted thereunder; (iii) modify
the provisions of the 1996 Plan relating to eligibility; or (iv)
materially increase the benefits accruing to participants under the 1996
Plan or extend the maximum option period thereunder. The Board of
Directors or the Compensation Committee, as the case may be, shall be
authorized to amend the 1996 Plan and the Options granted thereunder to
permit the Incentive Options granted thereunder to qualify as incentive
stock options within the meaning of Section 422 of the Code.
In the event of any change in the outstanding shares of the Company's
Common Stock (through events such as a stock split, stock dividend,
recapitalization of the Company or other like change in its capital structure),
the Compensation Committee will make such adjustment to each outstanding Option
that it, in its sole discretion, deems appropriate, subject to the provisions of
Section 424(a) of the Code as to Incentive Options. It is intended that
Incentive Options granted under the 1996 Plan will meet the definitional
requirements of Section 422(b) of the Code for "incentive stock options."
Under the Code, an employee generally is not subject to regular income
tax upon the grant or exercise of an Incentive Option if, subsequent to its
exercise, the employee holds the stock received for the longer of two years from
the date of the grant or one year from the date of exercise (the "Required
Holding Period"). Upon the sale of such stock subsequent to the Required Holding
Period, the difference, if any, between the amount realized from the sale and
the tax basis to the employee will be taxed as long-term capital gain or loss
(provided that such stock was held by the employee as a capital asset at such
time).
In general, if an employee: (i) exercises an Incentive Option by
delivering stock previously acquired pursuant to the exercise of an Incentive
Option before the end of the Required Holding Period applicable to such stock;
or (ii) after exercising an Incentive Option, disposes of the stock so acquired
before the end of the Required Holding Period (i.e., in either case, makes a
"disqualifying disposition"), such employee would be deemed in receipt of
ordinary income in the year of the disqualifying disposition in an amount equal
to the excess of the fair market value of the stock at the date of exercise over
the exercise price. However, if the disposition of the stock is a sale or
exchange with respect to which a loss, if sustained, would be recognized to such
employee, and if the sale proceeds are less than the fair market value of the
stock on the date of exercise of the Incentive Option, the employee's ordinary
income would be limited to the excess, if any, of the amount realized on such
disposition over the tax basis of such stock. If the amount realized upon a
taxable disposition of the stock exceeds the fair market value of the stock on
the date of exercise, the excess would be treated as short-term or long-term
capital gain, depending on the applicable holding period on the disposition date
(provided that such stock was held by the employee as a capital asset at such
time).
A deduction is not allowed to the Company for federal income tax
purposes with respect to the grant or exercise of an Incentive Option or the
disposition, after the Required Holding Period, of stock acquired upon exercise.
In the event of a disqualifying disposition, a federal income tax deduction will
be allowed to the Company in an amount equal to the ordinary income taxable to
the employee, provided that such amount constitutes an ordinary and necessary
business expense to the Company and is reasonable.
For purposes of computing whether an employee is subject to any
alternative minimum tax liability, an employee who exercises an Incentive Option
generally would be required to increase alternative minimum taxable income, and
compute the tax basis in the stock so acquired, in the same manner as if the
optionee had exercised a Non-Qualified Option.
A participant who receives a Non-Qualified Option will not recognize
any taxable income upon the grant of such Non-Qualified Option. In general, upon
exercise of a Non-Qualified Option, a participant will be treated as having
received ordinary income in an amount equal to the excess of the fair market
value of the stock at the time of exercise over the exercise price.
Any holder of a Non-Qualified Option who is subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of 1934 should
consult his tax advisor as to whether the timing of income recognition is
deferred for any period following exercise of such Non-Qualified Option (i.e.,
the "Deferral Period"). Absent a written election filed with the IRS within
thirty days after the date of exercise pursuant to Section 83(b) of the Code to
include in income, as of the exercise date, the excess of the fair market value
of the stock on the exercise date over the exercise price, recognition of income
by the holder will be deferred until the expiration of the Deferral Period, if
any.
If approved by the Shareholders, the 1996 Plan will not be qualified
under the provisions of Section 401(a) of the Code and will not be subject to
any of the provisions of the Employee Retirement Income Security Act of 1974, as
amended.
New Plan Benefits
The following table sets forth the stock options that the individuals
and groups referred to below will be eligible to receive in 1996 under the
1996 Plan if the 1996 Plan is approved by the Shareholders at the Meeting.
Name and Position 1996 Stock Option Plan
- ----------------- Dollar Value ($) Number of Units
---------------- ---------------
Jonathan M. Spiller, (1) (1)
President and Chief Executive Officer....
Richard T. Bistrong, (1) (1)
Vice President - Sales and Marketing.....
Carol T. Burke, (1) (1)
Vice President - Finance and Secretary...
J. Michael Elliott, (1) (1)
Vice President-Operations................
Executive Group.......................... (1) (1)
Non-Executive Director Group............. (2) (2)
Non-Executive Officer Employee Group .... (1) (1)
(1) The grant of Options under the 1996 Plan is entirely within the
discretion of the Compensation Committee. The Company cannot determine
the nature, amount or the dollar value of awards that will be made in
the future.
(2) Not eligible for participation.
Vote Required
The affirmative vote of holders of a majority of the outstanding shares
of Common Stock present and voting at a Meeting at which a quorum is present is
required for the ratification of the 1996 Plan.
Recommendation of the Board of Directors
The Board of Directors has adopted and recommends that the Shareholders
vote FOR Proposal No. 7 on the Proxy Card.
PROPOSAL NO. 8
ADOPTION OF THE 1996 NON-EMPLOYEE DIRECTORS
STOCK OPTION PLAN
There will be presented to the Meeting a proposal to adopt the
1996 Non-Employee Directors Stock Option Plan (the "1996 Directors Plan"). The
1996 Directors Plan will replace the 1994 Outside Directors Stock Plan, which is
being discontinued for purposes of granting further options. The 1996 Directors
Plan is intended to benefit the Company and its shareholders by allowing those
members of the Board of Directors of the Company who are neither current nor
former employees of the Company to increase their financial stake in the Company
through ownership of Common Stock, thus underscoring the directors' mutual
interest with shareholders in increasing the long-term value of the Company's
stock.
On March 4, 1996, the Board of Directors of the Company
adopted the 1996 Directors Plan. Primary aspects of the 1996 Directors Plan, the
text of which is set forth in Appendix E, are as follows.
General Information
Participation in the 1996 Directors Plan would be limited to
members of the Board of Directors who are not current or former employees of the
Company or any of its subsidiaries ("Non-Employee Directors"). After the
election of six directors at the Meeting, there will be five Non-Employee
Directors.
Stock Option Grant
The 1996 Directors Plan provides that each year, on the day of
the Company's Annual Meeting of Shareholders, each individual elected, reelected
or continuing as a Non-Employee Director will automatically receive, in
consideration for service as a Director, non-qualified stock options of 25,000
shares of Common Stock. There are 300,000 shares of Common Stock reserved for
issuance under the 1996 Directors Plan. Under the 1996 Directors Plan's formula,
the exercise price for options granted under the 1996 Directors Plan will be the
closing price on the date of the grant of the Company's Common Stock as quoted
on the composite tape of the American Stock Exchange. Options become exercisable
three years from the date of grant and expire ten years from the date of grant.
The exercise price must be paid in cash. If, on the day of the annual meeting of
shareholders, the counsel for the Company determines, in her/his sole
discretion, that the Company is in possession of material, undisclosed
information that would prevent it from issuing securities, then the annual grant
of options to Non-Employee Directors will be suspended until the second day
after public dissemination of the information (or the first trading day
thereafter). The amount, pricing and other terms of the grant will remain as set
forth in the 1996 Directors Plan, with the exercise price of the option to be
determined in accordance with the formula on the date the option is finally
granted.
Cessation of Service
Upon retirement, a Non-Employee Director's options will
continue to become exercisable and must be exercised by the earlier of (i) 36
months following the date of retirement or (ii) the expiration of the applicable
option period, or such options shall be forfeited. Upon a Non-Employee
Director's disability or death, those options held by the Non-Employee Director
for at least one year prior to the date of death or the date of cessation of
service following disability shall become immediately exercisable; the
Non-Employee Director or his/her legal representatives or heirs must exercise
such options by the earlier of (i) 6 months or 36 months from the date of
cessation of service due to disability or death, respectively, as the case may
be, or (ii) the expiration of the applicable option period, or such options
shall be forfeited. Should an individual cease to serve as a Non-Employee
Director for any reason other than retirement, disability, death or cause,
he/she will have 90 days within which to exercise only those options which were
exercisable as of the date he/she ceased to serve as a director.
Federal Income Tax Consequences
The grant of a non-qualified stock option will not result in
income for the grantee or in a deduction for the Company. The exercise of a
stock option would result in ordinary income for the grantee and a deduction for
the Company measured by the difference between the option price and the fair
market value of the shares received at the time of exercise.
Other Information
The 1996 Directors Plan will become effective on approval of
the Company's Shareholders and will terminate, for purposes of granting further
options, on December 31, 2006 unless terminated earlier by the Board of
Directors or extended by the Board with the approval of Shareholders.
Pursuant to the 1994 Outside Directors Stock Plan,
Non-Employee Directors are currently compensated for their services as
directors. For a description of such compensation, see "INFORMATION CONCERNING
MEETINGS OF THE BOARD OF DIRECTORS AND BOARD COMMITTEES AND DIRECTOR
COMPENSATION -- COMPENSATION OF DIRECTORS". As of May , 1996 the last full
trading date prior to the printing and mailing of this Proxy Statement, the
reported closing price of the Company's Common Stock on the American Stock
Exchange was $ .
New Plan Benefits
The following table sets forth the stock options that the
individuals and groups referred to below will be eligible to receive in 1996 if
the 1996 Directors Plan is approved by the Shareholders at the Meeting.
Executive officers and employee-directors of the Company are not eligible to
participate in the 1996 Directors Plan.
Name and Position 1996 Non-Employee Directors
Stock Option Plan
Dollar Value ($) Number of Units
---------------- ---------------
Warren B. Kanders,
Chairman, Board of Directors......... ___(2) 25,000
Jonathan M. Spiller,
Director, Chief Executive Officer
and President....................... ___(2) 0(1)
Burtt R. Ehrlich,
Director............................ ___(2) 25,000
Nicholas Sokolow
Director............................ ___(2) 25,000
Thomas W. Strauss
Director............................ ___(2) 25,000
Richmont nominee..................... ___(2) 25,000
Non-Executive Director Group......... ___(2) 125,000
Non-Executive Officer Employee Group. ___(1) _____
- ------------
(1) Not eligible for participation.
(2) Dollar value is dependent upon the future share price of Company Common
Stock.
Vote Required
The affirmative vote of holders of a majority of the outstanding
shares of Common Stock present and voting at a Meeting at which a quorum is
present is required for the ratification of the 1996 Directors Plan of the
Company.
Recommendation of the Board of Directors
The Board of Directors has adopted and recommends that the
Shareholders vote FOR Proposal No. 8 on the Proxy Card.
PROPOSAL NO. 9
RATIFICATION OF APPOINTMENT OF PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee of the Board of
Directors, the Board has appointed Deloitte & Touche LLP as independent
certified public accountants for the Company to audit the consolidated financial
statements of the Company and its subsidiaries for the fiscal year ending
December 31, 1996 ("Fiscal 1996"). Deloitte & Touche LLP has acted in this
capacity since 1990.
The Company's Board of Directors recommends the ratification of the
appointment of Deloitte & Touche LLP as independent certified public accountants
for the Company to audit the financial statements of the Company for Fiscal
1996. If a majority of the Shareholders voting at the Meeting at which a quorum
is present, in person or by proxy, should not approve such appointment, the
Audit Committee and the Board of Directors of the Company will reconsider the
appointment of independent certified public accountants.
Vote Required
The affirmative vote of holders of a majority of the outstanding
shares of Common Stock present and voting at a Meeting at which a quorum is
present is required for the reappointment of Deloitte & Touche LLP as the
Company's independent certified public accountants for Fiscal 1996.
Recommendation of the Board of Directors
The Board of Directors recommends that the Shareholders reappoint
Deloitte & Touche LLP as independent certified public accountants of the Company
for the Fiscal 1996 by voting FOR Proposal No. 9 on the Proxy Card.
PROPOSAL NO. 10
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does
not intend to present any other matter for action at the Meeting other than as
set forth in the Notice of Annual Meeting and this Proxy Statement. If any other
matters properly come before the Meeting, it is intended that the shares
represented by the proxies will be voted, in the absence of contrary
instructions, in the discretion of the persons named in the proxy.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and any persons who own more than 10%
of the Company's capital stock to file with the SEC (and, if such security is
listed on a national securities exchange, with such exchange), various reports
as to ownership of such capital stock. Such persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely upon reports and representations submitted by the
directors, executive officers and holders of more than 10% of the Company's
capital stock, all Forms 3, 4 and 5 showing ownership of and changes of
ownership in the Company's capital stock during Fiscal 1995 were timely filed
with the SEC and the National Association of Securities Dealers Automated
Quotation System (NASDAQ), except that Richard T. Bistrong, Vice President-Sales
and Marketing of the Company, and Carol T. Burke, Vice President-Finance and
Secretary of the Company, both of whom had previously been awarded stock options
which should have been reported currently on Form 3 upon their becoming
executive officers of the Company on June 9, 1995, instead filed a Form 5 for
Fiscal 1995 reporting their beneficial ownership of shares underlying such stock
options.
ANNUAL REPORT
A copy of the Company's 1995 Annual Report to Shareholders
accompanies this Proxy Statement. Any Shareholder who has not received a copy of
the 1995 Annual Report to Shareholders and wishes to do so should contact the
Company's Corporate Secretary by mail at the address set forth on the notice of
annual meeting or by telephone at (904) 261-4035.
The Company will provide, without charge, to each Shareholder as of
the Record Date, on the written request of the Shareholder, a copy of the
Company's Annual Report on Form 10-KSB and all amendments thereto for the year
ended December 31, 1995, including the financial statements and schedules, as
filed with the SEC. Shareholders should direct the written request to the
Company's Corporate Secretary at c/o American Body Armor & Equipment, Inc., 191
Nassau Place Road, Yulee, Florida 32097.
PROPOSALS BY SHAREHOLDERS
Any proposal of a Shareholder intended to be presented at the
Annual Meeting of Shareholders to be held in 1997 must be received by the
Company no later than January __, 1997 to be considered for inclusion in the
Proxy Statement and form of proxy for the 1997 annual meeting. Proposals must
comply with Rule 14a-8 promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
FOR THE BOARD OF DIRECTORS
CAROL T. BURKE
Secretary
This Proxy is Solicited by the Board of Directors of
American Body Armor & Equipment, Inc.
ANNUAL MEETING
June 14, 1996
The undersigned hereby appoints Jonathan M. Spiller and Warren B. Kanders as
proxies to represent the undersigned, with full power of substitution, at the
Annual Meeting of Shareholders of American Body Armor & Equipment, Inc., to be
held on June 14, 1996 at 10:00 A.M., New York City time, at the offices of Kane
Kessler, P.C., 1350 Avenue of the Americas, 26th Floor, New York, New York
10019, and any adjournments and postponements thereof:
1. ELECTION OF -- FOR all nominees listed below
DIRECTORS (except as marked to the contrary below)
-- WITHHOLD AUTHORITY to vote for all nominees listed
below
Warren B. Kanders Burtt R. Ehrlich Thomas W. Strauss
Jonathan M. Spiller Nicholas Sokolow Richmont nominee
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through or otherwise strike the nominee's
name in the list above.
2. To consider and vote upon a proposal to change the name of the
Company to "Armor Holdings, Inc."
/ / FOR / / AGAINST / / WITHHOLD AUTHORITY TO VOTE
3. To consider and act upon a proposal to reincorporate the Company under
the laws of the State of Delaware by means of a merger of the Company
into a newly formed wholly-owned subsidiary incorporated in the State
of Delaware (the "Reincorporation").
/ / FOR / / AGAINST / / WITHHOLD AUTHORITY TO VOTE
4. To consider and vote upon a proposal to restructure the Company into a
holding company and to transfer the assets of the Company into a
wholly-owned subsidiary to effect the holding company structure, as
described herein (the "Restructuring").
/ / FOR / / AGAINST / / WITHHOLD AUTHORITY TO VOTE
5. To consider and vote upon a proposal to increase the number of shares
of Common Stock which the Company shall have the authority to issue to
50,000,000.
/ / FOR / / AGAINST / / WITHHOLD AUTHORITY TO VOTE
6. To consider and vote upon a proposal to authorize a series of preferred
stock with such rights, privileges and preferences as the Board of
Directors shall from time to time determine.
/ / FOR / / AGAINST / / WITHHOLD AUTHORITY TO VOTE
7. To consider and vote upon a proposal to adopt the Company's 1996
Stock Option Plan (the "1996 Plan").
/ / FOR / / AGAINST / / WITHHOLD AUTHORITY TO VOTE
8. To consider and vote upon a proposal to adopt the Company's 1996
Non-Employee Directors Stock Option Plan (the "1996 Directors Plan").
/ / FOR / / AGAINST / / WITHHOLD AUTHORITY TO VOTE
9. Proposal to ratify the selection of Deloitte & Touche LLP as the
Company's independent certified public accountants for the fiscal year
ending December 31, 1996.
/ / FOR / / AGAINST / / WITHHOLD AUTHORITY TO VOTE
10. In their discretion, the Proxies are authorized to vote upon such
other business that may properly come before the meeting.
THIS BALLOT, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. UNLESS OTHERWISE SPECIFIED, THE SHARES
WILL BE VOTED "FOR" EACH PROPOSAL.
Dated: ___________________ ____________________________ _____________________
Signatures of Shareholder(s)
NOTE: Signature should agree with name on stock certificate as printed
thereon. Executors, administrators, trustees and other fiduciaries
should so indicate when signing.
PLEASE DATE, SIGN AND RETURN THIS PROXY. THANK YOU.
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May __, 1996 (the "Merger
Agreement"), between American Body Armor & Equipment, Inc., a Florida
corporation ("ABA") and Armor Holdings, Inc., a Delaware corporation and a
wholly-owned subsidiary of ABA ("Armor Holdings").
W I T N E S S E T H
WHEREAS, on the date hereof, ABA has authority to issue 15,000,000
shares of Common Stock, par value of $.03 per share (the "ABA Common Stock"), of
which there are 6,825,835 shares outstanding and no shares held in treasury, and
1,700,000 shares of 3% Convertible $1.00 stated value Preferred Stock, of which
there are no shares issued and outstanding and no shares held in treasury;
WHEREAS, on the date hereof, Armor Holdings has authority to issue
50,000,000 shares of Common Stock, par value $.01 per share (the "Armor Holdings
Common Stock"), of which there are no shares issued and outstanding and no
shares held in treasury, and 5,000,000 shares of preferred stock, of which there
are no shares issued and outstanding and no shares held in treasury.
WHEREAS, the respective Boards of Directors of ABA and Armor Holdings
have determined that it is advisable and in the best interests of each of such
corporations that ABA merge with and into Armor Holdings upon the terms and
subject to the conditions set forth herein for the purpose of effecting the
change of the state of incorporation of ABA from the State of Florida to the
State of Delaware;
WHEREAS, the Board of Directors of ABA has by resolutions duly
adopted and approved this Merger Agreement;
WHEREAS, ABA has approved this Merger Agreement in its capacity
as the sole stockholder of Armor Holdings; and
WHEREAS, the Board of Directors of ABA has directed that this Merger
Agreement be submitted to a vote of its shareholders at the annual meeting of
shareholders to be held on June 14, 1996, or at any and all adjournments and
postponements thereof;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained, ABA and Armor Holdings hereby agree as follows:
Section 1. Merger. ABA shall be merged with and into Armor Holdings
(the "Merger"), and Armor Holdings shall be the surviving corporation
(hereinafter sometimes referred to as the "Surviving Corporation"). The Merger
shall become effective upon the date and time of filing of appropriate articles
of merger, providing for the Merger, with the Secretary of State of the State of
Florida and an appropriate certificate of ownership and merger, providing for
the Merger, with the Secretary of State of Delaware, whichever later occurs (the
"Effective Time").
Section 2. Governing Documents. The Certificate of Incorporation of
Armor Holdings, as in effect immediately prior to the Effective Time, shall be
the Certificate of Incorporation of the Surviving Corporation without change or
amendment until thereafter amended in accordance with the provisions thereof and
applicable law. The Bylaws of Armor Holdings, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation without
change or amendment until thereafter amended in accordance with the provisions
thereof, the Certificate of Incorporation of the Surviving Corporation and
applicable law.
Section 3. Succession. At the Effective Time, the separate corporate
existence of ABA shall cease, and Armor Holdings shall succeed to all of the
assets and properties (whether real, personal or mixed), rights, privileges,
franchises, immunities and powers of ABA, and Armor Holdings shall assume and be
subject to all of the duties, liabilities, obligations and restrictions of every
kind and description of ABA, including, without limitation, all outstanding
indebtedness of ABA, all in the manner and as more fully set forth in Section
259 of the General Corporation Law of the State of Delaware.
Section 4. Directors. The directors and the members of the various
committees of the Board of Directors of ABA immediately prior to the Effective
Time shall be the directors and members of such committees of the Surviving
Corporation at and after the Effective Time to serve until the expiration of
their respective terms and until their successors are duly elected and
qualified.
Section 5. Officers. The officers of ABA immediately preceding the
Effective Time shall be the officers of the Surviving Corporation at and after
the Effective Time until their successors are duly elected and qualified.
Section 6. Further Assurances. From time to time, as and when required
by the Surviving Corporation or by its successors or assigns, there shall be
executed and delivered on behalf of ABA such deeds and other instruments, and
there shall be taken or caused to be taken by it all such further and other
action, as shall be appropriate, advisable or necessary in order to vest,
perfect or conform, of record or otherwise, in the Surviving Corporation, the
title to and lien of all property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of ABA, and otherwise to carry out
the purposes of this Merger Agreement, and the officers and directors of the
Surviving Corporation are fully authorized, in the name and on behalf of ABA or
otherwise, to take any and all such action and to execute and deliver any and
all such deeds and other instruments.
Section 7. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof:
(a) each share of ABA Common Stock issued and outstanding
immediately prior to the Effective Time shall be changed and converted into and
shall be one fully paid and nonassessable share of Armor Holdings Common Stock;
(b) each share of ABA Common Stock held in the treasury of ABA
immediately prior to the Effective Time shall be automatically converted into
one share of Armor Holdings Common Stock, which shares shall continue to be
retained and held by the Surviving Corporation in the treasury thereof;
(c) each option, warrant, purchase right, unit or other
security of ABA issued and outstanding immediately prior to the Effective Time
shall be changed and converted into and shall be an identical security of Armor
Holdings, and the same number of shares of Armor Holdings Common Stock shall be
reserved for purposes of the exercise of such options, warrants, purchase
rights, units or other securities as is equal to the number of shares of ABA
Common Stock so reserved as of the Effective Time; and
(d) each share of Armor Holdings Common Stock issued and
outstanding in the name of ABA immediately prior to the Effective Time shall be
canceled and retired and resume the status of authorized and unissued shares of
Armor Holdings Common Stock, and no shares of Armor Holdings Common Stock or
other securities of Armor Holdings shall be issued in respect thereof.
Section 8. Employee Option and Benefit Plans. Each option or other
right to purchase or otherwise acquire shares of ABA Common Stock granted under
any employee option, stock purchase or other benefit plan of ABA (collectively,
the "Plans") which is outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become an option or right to acquire (and Armor
Holdings hereby assumes the obligation to deliver) the same number of shares of
Armor Holdings Common Stock, at the same price per share, and upon the same
terms, and subject to the same conditions, as set forth in the respective Plan
as in effect immediately prior to the Effective Time. The same number of shares
of Armor Holdings Common Stock shall be reserved for purposes of the Plans as is
equal to the number of shares of ABA Common Stock so reserved immediately prior
to the Effective Time. Armor Holdings hereby assumes, as of the Effective Time,
(i) the Plans and all obligations of ABA under the Plans, including the
outstanding options, stock purchase rights or awards or portions thereof granted
pursuant to the Plans and the right to grant additional options and stock
purchase right thereunder and (ii) all obligations of ABA under all other
benefit plans in effect as of the Effective Time with respect to which employee
rights or accrued benefits are outstanding as of the Effective Time.
Section 9. Dividends and Distributions. In the event that any dividend
or other distribution shall hereafter be declared by the Board of Directors of
ABA in respect of the outstanding shares of ABA Common Stock payable subsequent
to the Effective Time, the obligation to make payment of such dividend or other
distribution shall, by virtue of the Merger, become the obligation of the
Surviving Corporation and shall be satisfied in the manner specified in such
declaration, except that, to the extent such dividend or other distributions
shall have been declared payable in whole or in part in shares of ABA Common
Stock, the Surviving Corporation shall issue, in place thereof, to the persons
entitled thereto, the identical number of shares of Armor Holdings Common Stock.
Section 10. Condition to the Merger. The consummation of the Merger and
the other transactions herein provided is subject to receipt prior to the
Effective Time of the requisite approval of the Merger by the holders of ABA
Common Stock pursuant to the Florida Business Corporation Act.
Section 11. Certificates. At and after the Effective Time all of the
outstanding certificates which immediately prior thereto represented shares of
ABA Common Stock or warrants, units or other securities of ABA shall be deemed
for all purposes to evidence ownership of and to represent the shares of Armor
Holdings Common Stock or warrants, units or other securities of Armor Holdings,
as the case may be, into which the shares of ABA Common Stock or warrants, units
or other securities of ABA represented by such certificates have been converted
as herein provided and shall be so registered on the books and records of the
Surviving Corporation or its transfer agent. The registered owner of any such
outstanding certificate shall, until such certificate shall have been
surrendered for transfer or otherwise accounted for to the Surviving Corporation
or its transfer agent, have and be entitled to exercise any voting and other
rights with respect to, and to receive any dividends and other distributions
upon, the shares of Armor Holdings Common Stock or warrants, units or other
securities of Armor Holdings, as the case may be, evidenced by such outstanding
certificate, as above provided.
Section 12. Amendment. The parties hereto may amend, modify or
supplement this Merger Agreement prior to the Effective Time; provided, however,
that no amendment, modification or supplement may be made after the adoption of
this Merger Agreement by the shareholders of ABA which changes this Merger
Agreement in a way which, in the judgment of the Board of Directors of ABA,
would have a material adverse effect on the shareholders of ABA, unless such
amendment, modification or supplement is approved by such shareholders.
Section 13. Termination. This Merger Agreement may be terminated, and
the Merger and the other transactions provided for herein may be abandoned, at
any time prior to the Effective Time, whether before or after approval of this
Merger Agreement by the shareholders of ABA, by action of the Board of Directors
of ABA if:
(a) the condition specified in Section 10 hereof shall not
have been satisfied or waived;
(b) the Board of Directors of ABA determines for any reason,
in its sole judgment and discretion, that the consummation of the Merger would
be inadvisable or not in the best interests of ABA and its shareholders; or
(c) ABA fails to obtain all required third party consents and
the Board of Directors of ABA determines that such failure will have a material
adverse effect on the Company if the merger is consummated.
Section 14. Counterparts. This Merger Agreement may be executed in one
or more counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
Section 15. Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Merger Agreement.
Section 16. Florida Appointment. The Surviving Corporation hereby
agrees that it may be served with process in the State of Florida in any action
or special proceeding for enforcement of any liability or obligation of ABA or
the Surviving Corporation arising from the Merger. The Surviving Corporation
appoints the Secretary of State of the State of Florida as its agent to accept
service of process in any such suit or other proceeding and a copy of such
process shall be mailed by the Secretary of State of the State of Florida to the
Surviving Corporation at 191 Nassau Place Road, Yulee, Florida 32097 Attention:
Mr. Jonathan M. Spiller, President.
Section 17. Governing Law. This Merger Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, ABA and Armor Holdings have caused this Merger
Agreement to be executed and delivered as of the date first above written.
AMERICAN BODY ARMOR & EQUIPMENT, INC.
a Florida corporation
By: ______________________________
Name:_________________________
Title:________________________
ARMOR HOLDINGS, INC.
a Delaware corporation
By: ________________________________
Name:___________________________
Title:__________________________
APPENDIX B
CERTIFICATE OF INCORPORATION
OF
ARMOR HOLDINGS, INC.
The undersigned, a natural person, for the purpose of
organizing a corporation for conducting the business and promoting the purposes
hereinafter stated, under the provisions and subject to the requirements of the
laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware
Code and the acts amendatory thereof and supplemental thereto, and known,
identified and referred to as the "General Corporation Law of the State of
Delaware" or the "General Corporation Law"), hereby certifies that:
FIRST: The name of the corporation (hereinafter referred
to as the "Corporation") is:
Armor Holdings, Inc.
SECOND: The address, including street, number, city and
county, of the registered office of the Corporation in the State of Delaware is
32 Loockerman Square, Suite L-100, City of Dover, 19904, County of Kent; and the
name of the registered agent of the Corporation in the State of Delaware is The
Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in
any lawful act or activity for which Corporations may be organized under
the General Corporation Law of the State of Delaware.
FOURTH: The aggregate number of shares of capital stock which
the corporation shall have authority to issue is: Fifty-Five Million
(55,000,000) shares of the par value of one cent ($.01) each, divided into (a)
Fifty Million (50,000,000) shares of common stock (the "Common Stock") and (b)
Five Million (5,000,000) shares of preferred stock (the "Preferred Stock"). No
holder of shares of stock of any class shall be entitled as a matter of right to
subscribe for or purchase or receive any part of any new or additional issue of
shares of stock of any class or of securities convertible into shares of stock
of any class, whether now or hereafter authorized or whether issued for money,
for consideration other than money, or by way of dividend. The powers,
designations, preferences and rights (and the qualifications, limitations and
restrictions thereof) in respect of the Common Stock and the Preferred Stock are
as follows:
(a) Common Stock: Holders of shares of Common
Stock shall be entitled to cast one vote for each share
held at all shareholders' meetings for all purposes,
including the election of directors. The Common Stock does
not have cumulative voting rights.
(b) Preferred Stock: The Board of Directors shall
have the authority to establish, by resolution, all powers,
designations, preferences and rights (and the qualifications,
limitations and restrictions thereof), of the Preferred Stock,
including, without limitation, the following:
(i) the rate and times at which and the
other conditions on which dividends on the shares
of Preferred Stock may be declared and paid or set
aside for payment; whether the shares of Preferred
Stock shall be entitled to any participating or other
dividends in addition to dividends at the rate so
determined and, if so, on what terms; and whether
dividends shall be cumulative and, if so, from what
date or dates and on what terms; provided, however,
that no dividend on the shares of Preferred Stock
shall be declared except out of (A) the earned
surplus of the corporation or (B) the net profits of
the corporation for the fiscal year in which the
dividend is declared;
(ii) whether or not the shares of Preferred
Stock shall have voting rights in addition to the
voting rights provided by law and, if so, the terms
and conditions thereof, including the date or dates
or event or events upon or after which they shall
have such voting rights;
(iii) whether nor not the shares of
Preferred Stock shall be redeemable and, if so, the
terms and conditions, if any, upon which they shall
be redeemed, including the date or dates or event or
events upon or after which they shall be redeemable,
the cash or property for which they shall be
redeemed, whether they shall be redeemable at the
option of the holder or the corporation, or both,
events and the amount or rate of cash or property per
share payable in case of redemption, which amount may
vary under different conditions and at different
redemption dates; and
(iv) the amounts payable upon the shares of
Preferred Stock in the event of voluntary or
involuntary liquidation, dissolution, winding up
or distribution of the assets of the corporation.
FIFTH: The name and the mailing address of the incorporator is as
follows:
NAME MAILING ADDRESS
c/o Kane Kessler, P.C.
Robert L. Lawrence 1350 Avenue of the Americas, 26th Fl.
New York, New York 10019
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for this Corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of any receiver or receivers appointed for this Corporation under
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders of this Corporation, as the case
may be, and also on this Corporation.
EIGHTH: For the management of the business and for the conduct
of the affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of
the affairs of the Corporation shall be vested in its Board of
Directors. The number of directors which shall constitute the
whole Board of Directors shall not be less than three (3) nor
more than fifteen (15) as fixed by, or in the manner provided
in, the Bylaws. The phrase "whole Board" and the phrase "total
number of directors" shall be deemed to have the same meaning
to wit, the total number of directors which the Corporation
would have if there were no vacancies. No election of
directors need be by written ballot.
2. After the original or other Bylaws of the
Corporation have been adopted, amended, or repealed, as the
case may be, in accordance with the provisions of Section 109
of the General Corporation Law of the State of Delaware, and,
after the Corporation has received any payment for any of its
stock, the power to adopt, amend, or repeal the Bylaws of the
Corporation may be exercised by the Board of Directors of the
Corporation; provided, however, that any provision for the
classification of Directors of the Corporation for staggered
terms pursuant to the provisions of subsection (d) of Section
141 of the General Corporation Law of the State of Delaware
shall be set forth in an initial Bylaw or in a Bylaw adopted
by the stockholders entitled to vote of the Corporation unless
provisions for such classification shall be set forth in this
Certificate of Incorporation.
3. Whenever the Corporation shall be authorized to
issue only one class of stock, each outstanding share shall
entitle the holder thereof to notice of, and the right to vote
at, any meeting of stockholders. Whenever the Corporation
shall be authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied voting
power under the provisions of the certificate of incorporation
shall entitle the holder thereof to the right to vote at any
meeting of stockholders except as the provisions of paragraph
(2) of subsection (b) of Section 242 of the General
Corporation Law of the State of Delaware shall otherwise
require; provided, that no share of any such class which is
otherwise denied voting power shall entitle the holder thereof
to vote upon the increase or decrease in the number of
authorized shares of said class.
NINTH: (1) The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person seeking
indemnification did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful. The right to indemnification conferred
upon such persons by this Article NINTH shall be a contract right.
(2) The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
(3) To the extent that a director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
Sections (1) and (2) of this Article NINTH, or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
(4) Any indemnification under Sections (1) and
(2) of this Article NINTH (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
in such Sections (1) and (2). Such determination shall be made (a) by the
Board of Directors of the Corporation by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable,
a quorum of disinterested directors so directs, by independent legal counsel
in a written opinion, or (c) by the stockholders of the Corporation.
(5) Expenses (including attorneys' fees) incurred
by an officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer at the
commencement of such action, suit or proceeding to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by
the Corporation authorized in this Article NINTH. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors of the
Corporation deems appropriate.
(6) The indemnification and advancement of
expenses provided by, or granted pursuant to, the other sections of this
Article NINTH shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under law,
by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in an official capacity and as to action in
another capacity while holding such office.
(7) The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation would have the power
to indemnify him against such liability under the provisions of Section 145
of the General Corporation Law.
(8) For purposes of this Article NINTH, references
to "the Corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, employees or agents so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation, as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Article NINTH with respect to the resulting or surviving
corporation as he would have with respect to such consistent corporation if
its separate existence had continued.
(9) For purposes of this Article NINTH, references
to "other enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or
agent of the Corporation which imposes duties on, or involves service by, such
director, officer, employee or agent with respect to any employee benefit plan,
its participants or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred
to in this Article NINTH.
(10) The indemnification and advance of expenses
provided by, or granted pursuant to, this Article NINTH shall, unless
otherwise provided when authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
TENTH: From time to time any of the provisions of this
Certificate of Incorporation may be amended, altered or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the Corporation by
this Certificate of Incorporation are granted subject to the provisions of this
Article TENTH.
Signed on May __, 1996.
----------------------------------
ROBERT L. LAWRENCE, Incorporator
APPENDIX C
BYLAWS
OF
ARMOR HOLDINGS, INC.
ARTICLE I
Stockholders
SECTION 1. Annual Meetings. Subject to change by resolution of
the Board of Directors, the annual meeting of the stockholders of the
Corporation for the purpose of electing directors and for the transaction of
such other business as may be brought before the meeting shall be held on a date
fixed, from time to time, by the Board of Directors of the Corporation, and each
successive annual meeting shall be held on a date within thirteen months after
the date of the preceding annual meeting. The meeting may be held at such time
and such place within or without the State of Delaware as shall be fixed by the
Board of Directors and stated in the notice of the meeting.
SECTION 2. Special Meetings. Special meetings of the
stockholders may be called at any time by the President, a majority of the Board
of Directors or the Chairman of the Board or by a majority of the stockholders
of record of all shares entitled to vote. Special meetings shall be held on the
date and at the time and place either within or without the State of Delaware as
specified in the notice thereof.
SECTION 3. Notice of Meetings. Except as otherwise expressly
required by law or the Certificate of Incorporation of the Corporation, written
notice stating the place and time of the meeting and the purpose or purposes of
such meeting shall be given by the Secretary to each stockholder entitled to
vote thereat at his address as it appears on the records of the Corporation not
less than ten nor more than sixty days prior to the meeting. Notice of any
meeting of stockholders shall not be required to be given to any stockholder who
shall attend such meeting in person or by proxy; and if any stockholder shall,
in person or by attorney hereunto duly authorized, waive notice of any meeting,
in writing or by telephone or facsimile, whether before or after such meeting be
held, the notice thereof need not be given to him. The attendance of any
stockholder at a meeting, in person or by proxy, without protesting prior to the
conclusion of the meeting the lack of notice of such meeting, shall constitute a
waiver of notice by him. Notice of any adjourned meeting of stockholders need
not be given except as provided in Section 5 of this Article I.
SECTION 4. Quorum. Subject to the provisions of law in respect
of the vote that shall be required for a specific action, the number of shares
the holders of which shall be present or represented by proxy at any meeting of
stockholders in order to constitute a quorum for the transaction of any business
shall be at least a majority of all the shares issued and outstanding and
entitled to vote at such meeting. Where a separate vote by a class or classes is
required, a majority of the outstanding shares of such class or classes, present
in person or represented by proxy, shall constitute a quorum entitled to take
action with respect to that vote on that matter and the affirmative vote of the
majority of shares of such class or classes present in person or represented by
proxy at the meeting shall be the act of such class.
SECTION 5. Adjournment. At any meeting of stockholders,
whether or not there shall be a quorum present, the holders of a majority of the
shares voting at the meeting, whether present in person at the meeting or
represented by proxy at the meeting, may adjourn the meeting from time to time.
Except as provided by law, notice of such adjourned meeting need not be given
otherwise than by announcement of the time and place of such adjourned meeting
at the meeting at which the adjournment is taken. At any adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally called.
SECTION 6. Organization. The Chairman of the Board or, in his
absence or non-election, the Vice Chairman or, in his absence or non-election,
the President or, in the absence of both the foregoing officers, a Vice
President shall call meetings of the stockholders to order and shall act as
Chairman of such meetings. In the absence of all of the foregoing officers,
holders of a majority in number of the shares of the capital stock of the
Corporation present in person or represented by proxy and entitled to vote at
such meeting shall elect a Chairman, who may be the Secretary of the
Corporation. The Secretary of the Corporation shall act as secretary of all
meetings of the stockholders; but in the absence of the Secretary, the Chairman
may appoint any person to act as secretary of the meeting.
SECTION 7. Voting. Each stockholder shall, except as otherwise
provided by law or by the Certificate of Incorporation, at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
capital stock entitled to vote held by such stockholder, but no proxy shall be
voted on after three years from its date, unless said proxy provides for a
longer period. Every proxy must be signed by the stockholder or by his
attorney-in-fact, and shall be filed with the Inspectors of Election, if any,
prior to being voted upon. Directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the meeting and
entitled to vote on the election of directors. Any other action shall be
authorized by a vote of a majority of the votes cast except where the General
Corporation Law prescribes a different percentage of votes and/or a different
exercise of voting power, and except as may be otherwise prescribed by the
provisions of the Certificate of Incorporation and these Bylaws. In the election
of directors, and for any other action, voting need not be by ballot, unless the
Board of Directors in its discretion, or the officer of the Corporation
presiding at a meeting of stockholders, in his or her discretion, may require
that any votes cast at such meeting shall be cast by written ballot.
SECTION 8. Stockholders List. The officer of the Corporation
who has charge of the stock ledger of the Corporation shall prepare and make a
complete list of the stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order with the address of each and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole thereof and may be inspected by any
stockholder who is present. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the ledger, the
list required by this Section 8 of Article I or the books of the Corporation, or
to vote in person or by proxy at any meeting of stockholders.
SECTION 9. Addresses of Stockholders. Each stockholder shall
designate to the Secretary of the Corporation an address at which notices of
meetings and all other corporate notices may be served upon or mailed to him,
and if any stockholder shall fail to designate such address, corporate notices
may be served upon him by mail directed to him at his last known post office
address.
SECTION 10. Inspectors of Election. The Board of Directors may
at any time appoint one or more persons to serve as Inspectors of Election at
the next succeeding annual meeting of stockholders or at any other meeting or
meetings and the Board of Directors may at any time fill any vacancy in the
office of Inspector. If the Board of Directors fails to appoint Inspectors, or
if any Inspector appointed be absent or refuses to act, or if his office becomes
vacant and be not filled by the Board of Directors, the Chairman of any meeting
of the stockholders may appoint one or more temporary Inspectors for such
meeting. Each Inspector, if any, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the duties of
inspectors at such meeting with strict impartiality and according to the best of
his ability. The Inspectors, if any, shall determine the number of shares of
stock outstanding and the voting power of each, the shares of stock represented
at the meeting, the existence of a quorum, the validity and effect of proxies,
and shall receive votes, ballots, or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and tabulate
all votes, ballots, or consents, determine the result, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the person presiding at the meeting, the Inspector or Inspectors, if
any, shall make a report in writing of any challenge, question, or matter
determined by him or them and execute a certificate of any fact found by him or
them. Except as otherwise required by subsection (e) of Section 231 of the
General Corporation Law, the provisions of that Section shall not apply to the
corporation. All proxies shall be filed with the Inspectors of Election of the
meeting before being voted upon.
SECTION 11. Action by Consent. Unless otherwise provided in
the Certificate of Incorporation, any action required to be taken at any meeting
of stockholders, or any action which may be taken at any meeting of such
stockholders, may be taken without a meeting, without prior notice and without a
vote if a consent in writing, setting forth the action so taken, shall be signed
by the holders of all of the outstanding voting stock of the Corporation. In
addition, any action required by the General Corporation Law to be taken at any
annual or special meeting of stockholders, or any action which may be taken at
any annual or special meeting of stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Action taken pursuant to this
paragraph shall be subject to the provisions of Section 228 of the General
Corporation Law.
ARTICLE II
Board of Directors
SECTION 1. General Powers. The property, affairs and business
of the Corporation shall be managed by or under the direction of the Board of
Directors. The Board of Directors shall have the power and authority to
authorize the officers of the Corporation to enter into such agreements as the
Board of Directors shall deem appropriate, including the power and authority to
authorize the seal of the Corporation to be affixed to all papers that may
require it.
SECTION 2. Number, Qualification and Term of Office. The
initial number of directors shall consist of six (6) persons. Thereafter, the
number of directors may be fixed from time to time by action of the Board of
Directors within the maximum and minimum limits provided by the Certificate of
Incorporation. Directors need not be stockholders. The directors shall be
elected at the annual meeting of stockholders except as otherwise provided for
filling vacancies. Each director shall hold office for the term for which he is
appointed or elected and until his successor shall have been elected and shall
qualify, or until his death or until he shall resign or shall have been removed
in the manner hereinafter provided. Directors need not be elected by ballot,
except upon demand of any stockholder. The Chairman of the Board, if one be
elected, and the Vice Chairman of the Board, if one be elected, shall be chosen
from among the directors. The number of directors may be increased or decreased
by action of the stockholders or of the directors.
SECTION 3. Chairman of the Board. The Chairman of the Board,
if any, shall preside, if present, at all meetings of the stockholders and at
all meetings of the Board of Directors and shall perform such other duties and
have such other powers as from time to time may be assigned by the Board of
Directors or prescribed by these Bylaws.
SECTION 4. Vice Chairman of the Board. The Vice Chairman of
the Board, if any, shall, at the request of the Chairman of the Board or in his
absence or disability, perform the duties of the Chairman of the Board and when
so acting shall have all the powers of, and be subject to all restrictions
upon, the Chairman of the Board and shall perform such other duties and have
such other powers as from time to time may be assigned to him by the Chairman of
the Board or prescribed by these Bylaws.
SECTION 5. Quorum and Manner of Action. Except as otherwise
provided by law or these Bylaws, a majority of the entire Board of Directors
shall be required to constitute a quorum for the transaction of business at any
meeting, except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided that
such majority shall constitute at least one-half of the whole Board. The act of
a majority of a quorum of the Board of Directors shall be the act of the Board
of Directors. In the absence of a quorum, a majority of the directors present
may adjourn any meeting from time to time until a quorum be had. Notice of any
adjourned meeting need not be given. The directors shall act only as a board and
individual directors shall have no power as such. In the event that the Board of
Directors shall be unable to take action on any matter because of a deadlock,
upon the motion of any director the matter shall be submitted to a vote of the
stockholders. Any action so approved by a majority vote of the stockholders
shall be the action of the Board of Directors, however, any director who voted
against the action taken by the stockholders prior to the submission of such
matter to the stockholders may, within ten days following such stockholder vote,
dissent in writing to such action to the Secretary of the Corporation, who shall
enter such dissent in the minutes of the Corporation.
SECTION 6. Place of Meetings; Etc. The Board of Directors may
hold its meetings, have one or more offices and keep the books and records of
the Corporation at such place or places within or without the State of Delaware
as the Board may from time to time determine or as shall be specified or fixed
in the respective notices or waivers of notice thereof.
SECTION 7. Regular Meetings. A regular meeting of the Board of
Directors shall be held for the election of officers and the transaction of
other business as soon as practicable after each annual meeting of stockholders,
and other regular meetings of said Board shall be held at such times and places
as said Board shall direct. No notice shall be required for any regular meeting
of the Board of Directors but a copy of every resolution fixing or changing the
time or place of regular meetings shall be mailed to every director at least
three days before the first meeting held in pursuance thereof.
SECTION 8. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the President, or any one
Director. The Secretary or any Assistant Secretary shall give notice of the time
and place of each special meeting by mailing a written notice of the same to
each director at his last known post office address at least three business days
before the meeting or by causing the same to be delivered personally or to be
transmitted by telecopier, overnight mail, telegraph, cable, wireless, telephone
or orally at least twenty-four hours before the meeting to each director. In the
event the Secretary or Assistant Secretary shall fail to give the notice of a
special meeting called in accordance with this Section 8, the person who called
such meeting shall be empowered to give notice of such meeting in accordance
with the immediately preceding sentence.
SECTION 9. Action by Consent. Any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting, if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
SECTION 10. Organization. At each meeting of the Board of
Directors, the Chairman of the Board or in his absence, the Vice Chairman of the
Board, or in his absence, the President, or in his absence or non-election, a
director chosen by a majority of the directors present shall act as Chairman.
The Secretary or, in his absence, an Assistant Secretary or, in the absence of
both the Secretary and an Assistant Secretary, any person appointed by the
Chairman shall act as secretary of the meeting.
SECTION 11. Resignations. Any director of the Corporation may
resign at any time by giving written notice to the Board of Directors, the
President or the Secretary of the Corporation. The resignation of any director
shall take effect at the time specified therein, and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 12. Removal of Directors. Except as otherwise provided
by law, any director or the entire Board of Directors may be removed, with or
without cause, by the affirmative vote of the holders of a majority of the
shares then entitled to vote at an election of directors.
SECTION 13. Vacancies. Any vacancy in the Board of Directors
caused by death, resignation, removal, disqualification, an increase in the
number of directors or any other cause shall be filled by a majority of the
directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election of directors and until their successors are duly elected and qualified,
or until their earlier resignation or removal.
SECTION 14. Compensation of Directors. Directors may receive
such reasonable sums for their services and expenses as may be directed by
resolution of the Board; provided that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for their services and expenses.
SECTION 15. Committees. By resolution or resolutions passed by
a majority of the whole Board at any meeting of the Board of Directors, the
directors may designate one or more committees of the Board of Directors, each
committee to consist of two or more directors. To the extent provided in said
resolution or resolutions, unless otherwise provided by law, such committee or
committees shall have and may exercise all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
including the power and authority to authorize the seal of the Corporation to be
affixed to all papers that may require it. No committee, however, shall have the
power to declare dividends or to authorize the issuance of shares of capital
stock of the Corporation. Further, the Board of Directors may designate one or
more directors as alternate members of a committee who may replace an absent or
disqualified member at any meeting. If an alternative member of a committee is
not selected by the Board of Directors, and in the absence or disqualification
of a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. A committee may
make such rules for the conduct of its business and may appoint such committees
and assistants as it shall from time to time deem necessary. A majority of the
members of a committee shall constitute a quorum for the transaction of business
of such committee. Regular meetings of a committee shall be held at such times
as such committee shall from time to time by resolution determine. No notice
shall be required for any regular meeting of a committee but a copy of every
resolution fixing or changing the time or place of regular meetings shall be
mailed to every member of such committee at least three days before the first
meeting held in pursuance thereof. Special meetings of a committee may be called
by the Chairman of such committee or the Secretary of such committee, or any two
members thereof. The Secretary of the Corporation or the Secretary of such
committee shall give notice of the time and place of each special meeting by
mail at least two days before such meeting or by telegraph, cable, wireless,
telephone or orally at least twenty-four hours before the meeting to each member
of such committee.
SECTION 16. Participation in Meetings. Members of the Board of
Directors or of any committee may participate in any meeting of the Board or
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall constitute presence in
person at such meeting.
SECTION 17. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted by such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or the committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts to his
or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
ARTICLE III
Officers
SECTION 1. Number. The officers of the Corporation shall
consist of a President, a Treasurer and a Secretary and, if deemed necessary,
expedient or desirable by the Board of Directors, a Chairman of the Board, a
Vice-Chairman of the Board, an Executive Vice President and one or more other
Vice-Presidents. In addition, the Board may elect one or more Vice Presidents
and such other officers as may be appointed in accordance with the provisions of
Section 3 of this Article III. Any number of offices may be held by the same
person, as the directors may determine. Except as may otherwise be provided in
the resolutions of the Board of Directors choosing him, no officer other than
the Chairman or Vice-Chairman of the Board, if any, need be a director.
SECTION 2. Election. Term of Office and Qualification. The
officers shall be elected annually by the Board of Directors at their first
meeting after each annual meeting of the stockholders of the Corporation. Each
officer, except such officers as may be appointed in accordance with the
provisions of Section 3 of this Article, shall hold office until his successor
shall have been duly elected and qualified, or until his death or until he shall
have resigned or shall have become disqualified or shall have been removed in
the manner hereinafter provided.
SECTION 3. Subordinate Officers. The Board of Directors or the
President may from time to time appoint such other officers, including one or
more Assistant Treasurers and one or more Assistant Secretaries, and such agents
and employees of the Corporation as may be deemed necessary or desirable. Such
officers, agents and employees shall hold office for such period and upon such
terms and conditions, have such authority and perform such duties as in these
Bylaws provided or as the Board of Directors or the President may from time to
time prescribe. The Board of Directors or the President may from time to time
authorize any officer to appoint and remove agents and employees and to
prescribe the powers and duties thereof.
SECTION 4. Removal. Any officer may be removed, either
with or without cause, by the affirmative vote of a majority of the Board of
Directors.
SECTION 5. Resignations. Any officer may resign at any time by
giving written notice to the Board of Directors, the President or the Secretary.
Any such resignation shall take effect at the date of receipt of such notice or
at any later time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 6. Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall be filled
for the unexpired portion of the term in the manner prescribed in these Bylaws
for regular election or appointment to such office.
SECTION 7. President. The President shall be the Chief
Executive Officer of the Corporation and shall have general direction of the
affairs of the Corporation and general supervision over its several officers,
subject, however, to the control of the Board of Directors, and in general shall
perform such duties and, subject to the other provisions of these Bylaws, have
such powers incident to the office of President and perform such other duties
and have such other powers as from time to time may be assigned to him by the
Board of Directors.
SECTION 8. Vice Presidents. A Vice President may sign with
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary certificates of stock of the Corporation and shall have such other
powers and shall perform such other duties as from time to time may be assigned
to him by the Board of Directors or the President or prescribed by these Bylaws.
SECTION 9. Secretary. The Secretary shall keep or cause to be
kept, in books provided for the purpose, the minutes of the meetings of the
stockholders, the Board of Directors and any committee when so required, shall
see that all notices are duly given in accordance with the provisions of these
Bylaws and as required by law, shall be custodian of the records and the seal of
the Corporation and see that the seal is affixed to all documents, the execution
of which on behalf of the Corporation under its seal is duly authorized in
accordance with the provisions of these Bylaws, shall keep or cause to be kept a
register of the post office address of each stockholder, may sign with the
Chairman of the Board, the President or any Vice President certificates of stock
of the Corporation, and in general shall perform such duties and have such
powers incident to the office of Secretary and shall perform such other duties
and have such other powers as from time to time may be assigned to him by the
Board of Directors or the President or prescribed by these Bylaws.
SECTION 10. Assistant Secretaries. Any Assistant Secretary
shall, at the request of the Secretary or in his absence or disability, perform
the duties of the Secretary and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the Secretary and shall perform such
other duties and have such other powers as from time to time may be assigned to
him by the President, the Secretary or the Board of Directors or prescribed by
these Bylaws.
SECTION 11. Chief Financial Officer. The Chief Financial
Officer shall be responsible to the Board of Directors and the President for all
financial control and internal audit of the Corporation and its subsidiaries. He
shall perform such other duties as may be assigned to him by the Board of
Directors, the President or prescribed by these Bylaws.
SECTION 12. Treasurer. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation,
and deposit all such funds in the name of the Corporation in such banks, trust
companies or other depositaries as shall be selected in accordance with the
provisions of these Bylaws, shall at all reasonable times exhibit his books of
account and records, and cause to be exhibited the books of account and records
of any corporation controlled by the Corporation to any of the directors of the
Corporation upon application during business hours at the office of the
Corporation, or such other corporation, where such books and records are kept,
shall, if called upon to do so, receive and give receipts for monies due and
payable to the Corporation from any source whatsoever, may sign with the
Chairman of the Board, the President or any Vice President certificates of stock
of the Corporation, and in general shall perform such duties and have such
powers incident to the office of Treasurer and such other duties and have such
other powers as from time to time may be assigned to him by the Board of
Directors or the President or prescribed by these Bylaws.
SECTION 13. Assistant Treasurers. Any Assistant Treasurer
shall, at the request of the Treasurer or in his absence or disability, perform
the duties of the Treasurer and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the Treasurer and shall perform such
duties and have such other powers as from time to time may be assigned to him by
the President, the Treasurer or the Board of Directors or prescribed by these
Bylaws.
SECTION 14. Other Officers. Such officers as the Board of
Directors may choose shall perform such duties and have such powers as may be
appropriate to such officer or as from time to time may be assigned to them by
the Board of Directors. The Board of Directors may delegate to any other officer
of the Corporation the power to choose such other officers and to prescribe
their respective duties and powers.
SECTION 15. Salaries. The salaries of the officers shall be
fixed from time to time by the Board of Directors. No officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the Corporation.
SECTION 16. Authority of Officers. The officers of the
Corporation shall have such duties and authority as set forth in these Bylaws
and as shall be determined from time to time by the Board of Directors.
ARTICLE IV
Shares and Their Transfer
SECTION 1. Certificates of Stock. Certificates for shares of
the capital stock of the Corporation shall be in such form not inconsistent with
law as shall be approved by the Board of Directors. They shall be numbered in
order of their issue and shall be signed by the Chairman of the Board or the
President or any Vice President and the Treasurer or any Assistant Treasurer, or
the Secretary or any Assistant Secretary of the Corporation, and the seal of the
Corporation shall be affixed thereto. Any of or all the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who shall have signed or whose facsimile signature shall have been placed upon
any such certificate or certificates shall cease to be such officer or officers
of the Corporation, whether because of death, resignation or otherwise, before
such certificate or certificates shall have been delivered by the Corporation,
such certificate or certificates may nevertheless be adopted by the Corporation
and be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature shall have been used
thereon had not ceased to be such officer or officers of the Corporation.
SECTION 2. Uncertificated Shares. Subject to any conditions
imposed by the General Corporation Law, the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or
all classes or series of the stock of the Corporation shall be uncertificated
shares. Within a reasonable time after the issuance or transfer of any
uncertificated shares, the Corporation shall send to the registered owner
thereof any written notice prescribed by the General Corporation Law.
SECTION 3. Fractional Share Interests. The Corporation may,
but shall not be required to, issue fractions of a share. If the Corporation
does not issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in registered form
(either represented by a certificate or uncertificated) or bearer form
(represented by a certificate) which shall entitle the holder to receive a full
share upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share or an uncertificated fractional share shall,
but scrip or warrants shall not unless otherwise provided therein, entitle the
holder to exercise voting rights, to receive dividends thereon, and to
participate in any of the assets of the Corporation in the event of liquidation.
The Board of Directors may cause scrip or warrants to be issued subject to the
conditions that they shall become void if not exchanged for certificates
representing the full shares or uncertificated full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the Corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions which the Board of Directors may impose.
SECTION 4. Transfer of Stock. Transfer of shares of the
capital stock of the Corporation shall be made only on the books of the
Corporation by the holder thereof, or by his attorney hereunto authorized by a
power of attorney duly executed and filed with the Secretary of the Corporation,
or a transfer agent of the Corporation, if any, on surrender of the certificate
or certificates for such shares properly endorsed. A person in whose name shares
of stock stand on the books of the Corporation shall be deemed the owner thereof
as regards the Corporation, and the Corporation shall not be bound to recognize
any equitable or other claim to or interest in such shares on the part of any
other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of the State of Delaware.
SECTION 5. Lost, Destroyed and Mutilated Certificates. The
holder of any stock issued by the Corporation shall immediately notify the
Corporation of any loss, destruction or mutilation of the certificate therefor
or the failure to receive a certificate of stock issued by the Corporation, and
the Board of Directors or the Secretary of the Corporation may, in its or his
discretion, cause to be issued to such holder a new certificate or certificates
of stock, upon compliance with such rules, regulations and/or procedures as may
be prescribed or have been prescribed by the Board of Directors with respect to
the issuance of new certificates in lieu of such lost, destroyed or mutilated
certificate or certificates of stock issued by the Corporation which are not
received, including reasonable indemnification to indemnify it against any claim
that may be made against it on account of the alleged loss, theft or destruction
of any such certificate or the issuance of such new certificate.
SECTION 6. Transfer Agent and Registrar; Regulations. The
Corporation shall, if and whenever the Board of Directors shall so determine,
maintain one or more transfer offices or agencies, each in the charge of a
transfer agent designated by the Board of Directors, where the shares of the
capital stock of the Corporation shall be directly transferable, and also one or
more registry offices, each in the charge of a registrar designated by the Board
of Directors, where such shares of stock shall be registered, and no certificate
for shares of the capital stock of the Corporation, in respect of which a
Registrar and/or Transfer Agent shall have been designated, shall be valid
unless countersigned by such Transfer Agent and registered by such Registrar, if
any. The Board of Directors shall also make such additional rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of certificates for shares of the capital stock of the Corporation.
SECTION 7. Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
to express consent to corporate action in writing without a meeting, to receive
payment of any dividend or other distribution or allotment of any rights, to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date which shall not be more than sixty nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action, and only such stockholders as shall be stockholders of record of the
date so fixed shall be entitled to such notice of and to vote at such meeting
and any adjournment thereof, to express consent to any such corporate action to
receive payment of such dividend or to receive such allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid. If the stock transfer books are to be closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting in the
case of a merger or consolidation, the books shall be closed at least twenty
days before such meeting.
SECTION 8. Beneficial Owners. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by law.
ARTICLE V
General Provisions
SECTION 1. Fiscal Year. The fiscal year of the
Corporation shall end on such date of each year as shall be determined by
the Board of Directors of the Corporation.
SECTION 2. Waivers of Notice. Whenever any notice of any
nature is required by law, the provisions of the Certificate of Incorporation or
these Bylaws to be given, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
SECTION 3. Qualifying in Foreign Jurisdiction. The Board of
Directors shall have the power at any time and from time to time to take or
cause to be taken any and all measures which they may deem necessary for
qualification to do business as a foreign corporation in any one or more foreign
jurisdictions and for withdrawal therefrom.
SECTION 4. Registered Office. The registered office of the
Corporation shall be in the City of Dover, County of Kent, State of Delaware.
SECTION 5. Other Offices. The Corporation may also have
offices at such other places, both within and without the State of Delaware as
the Board of Directors may from time to time determine.
SECTION 6. Proxies. Except as otherwise provided in these
Bylaws or in the Certificate of Incorporation of the Corporation, and unless
otherwise provided by resolution of the Board of Directors, the Chairman of the
Board may appoint from time to time an attorney or attorneys, or agent or
agents, of the Corporation, on behalf and in the name of the Corporation, to
cast the votes which the Corporation may be entitled to cast as a stockholder or
otherwise in any other corporation any of whose stock or other securities may be
held by the Corporation, at meetings of the holders of the stock or other
securities of such other corporation, or to consent in writing to any action by
such other corporation, and may instruct the person or persons so appointed as
to the manner of casting such votes or giving such consent, and may execute or
cause to be executed on behalf and in the name of the Corporation and under its
corporate seal, or otherwise, all such written proxies or other instruments as
he may deem necessary or proper in the premises.
SECTION 7. Seal. The Board of Directors shall provide a
suitable seal containing the name of the Corporation, which seal shall be in the
charge of the Secretary and which may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise. If and when so
directed by the Board of Directors, a duplicate of the seal may be kept and be
used by an officer of the Corporation designated by the Board.
SECTION 8. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
SECTION 9. Disbursements. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
other person or persons at the Board of Directors may from time to time
designate.
ARTICLE VI
Amendments
These Bylaws may be altered, amended or repealed, in whole or
in part, or new Bylaws may be adopted by either the stockholders or by the Board
of Directors, provided, however, that notice of such alteration, amendment,
repeal or adoption of new Bylaws be contained in the notice of such meeting of
stockholders or Board of Directors, as the case may be. All such amendments must
be approved by either the holders of a majority of the outstanding capital stock
entitled to vote thereon or by a majority of the entire Board of Directors then
in office.
APPENDIX D
AMERICAN BODY ARMOR & EQUIPMENT, INC.
1996 STOCK OPTION PLAN
I. PURPOSE
American Body Armor & Equipment, Inc. (the "Company") desires
to afford certain of its key employees and consultants and the key employees and
consultants of any subsidiary corporation or parent corporation of the Company
now existing or hereafter formed or acquired who are responsible for the
continued growth of the Company an opportunity to acquire a proprietary interest
in the Company, and thus to create in such key employees and consultants an
increased interest in and a greater concern for the welfare of the Company and
its subsidiaries.
The Company, by means of this 1996 Stock Option Plan
(the "Plan"), seeks to retain the services of key employees and
consultants (sometimes hereinafter collectively, "Participants") and to
enable the Company to attract and retain persons of competence.
The stock options ("Options") offered pursuant to the Plan are
a matter of separate inducement and are not in lieu of any salary or other
compensation for the services of any key employee or consultant.
The Options granted under the Plan are intended to be either
incentive stock options ("Incentive Options") within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), or options that
do not meet the requirements for Incentive Options ("Non-Qualified Options"),
but the Company makes no warranty as to the qualification of any Option as an
Incentive Option.
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
AND OTHER LIMITATIONS
(a) The total number of shares of common stock of the Company
which may be purchased or acquired pursuant to the exercise of Options granted
under the Plan shall not exceed, in the aggregate, 1,500,000 shares of the
authorized common stock, $.01 par value per share, of the Company (the
"Shares"), such number subject to adjustment as provided in Article XI hereof.
Shares that are the subject of Options shall be counted only once in determining
whether the maximum number of Shares that may be purchased or awarded under the
Plan has been exceeded.
(b) The maximum number of shares of Common Stock
subject to any Option which may be granted under this Plan to each
Participant shall not exceed 100,000 shares (subject to any increase
or decrease pursuant to Article XI during each fiscal year of the
Company) during the entire term of the Plan. To the extent that shares of
Common Stock for which Options are permitted to be granted to a
Participant pursuant to this Section III(b) during a fiscal year are not
covered by a grant of an Option to a Participant issued in such fiscal
year, such shares of Common Stock shall automatically increase the
number of shares available for grant of Options to such Participant in
the subsequent fiscal years during the term of the Plan.
(c) Shares acquired under the Plan may be either
authorized but unissued Shares or Shares of issued stock held in the
Company's treasury, or both, at the discretion of the Company. If and to
the extent that Options granted under the Plan expire or terminate
without having been exercised, the Shares covered by such expired or
terminated Options shall again become available for award under the Plan.
Except as provided in Articles XVIII and XXI, the Company may,
from time to time during the period beginning on the date of the adoption of the
Plan by the Company (the "Effective Date") and ending on the date which is ten
(10) years from the Effective Date (the "Termination Date"), grant to certain
Participants (as hereinafter defined) of the Company, or of any subsidiary
corporation or parent corporation of the Company now existing or hereafter
formed or acquired, Incentive Options and/or Non-Qualified Options under the
terms hereinafter set forth.
As used in the Plan, the terms "subsidiary corporation" and
"parent corporation" shall mean, respectively, a corporation coming within the
definition of such terms contained in Sections 424(f) and 424(e) of the Code.
III. ADMINISTRATION
The board of directors of the Company (the "Board of
Directors") shall designate from among its members a compensation
committee (the "Committee") to administer the Plan. The Committee shall
consist of two or more members of the Board of Directors, each of whom
shall be a "disinterested person" within the meaning of Rule 16b-3 (or
any successor rule or regulation) ("Rule 16b-3") promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and
each of whom shall be an "outside director" in accordance with Section
162(m) of the Code. Pursuant to Rule 16b-3, promulgated under the
Exchange Act, in order for a director to be eligible to receive benefits
under a plan, a director must not, during the one (1) year period prior
to serving as a plan administrator, have been granted or awarded equity
securities pursuant to any plan of an issuer, except through
participation in formula grants, ongoing broad-based employee plans and
elections to receive annual directors' fees in securities of the issuer.
A majority of the members of the Committee shall constitute a quorum,
and the act of a majority of the members of the Committee shall be the
act of the Committee. Any member of the Committee may be removed at any
time, either with or without cause, by resolution adopted by the Board
of Directors, and any vacancy on the Committee at any time may be filled
by resolution adopted by the Board of Directors.
Any or all powers and functions of the Committee may be
exercised at any time and from time to time by the Board of Directors; provided,
however, that all of the members of the Board of Directors are "disinterested
persons" within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Exchange Act.
Subject to the express provisions of the Plan, the Board of
Directors or the Committee, as the case may be, shall have authority, in its
discretion, to determine the Participants to whom Options shall be granted, the
time when such Options shall be granted, the number of Shares which shall be
subject to each Option, the purchase price or exercise price of each Option, the
period(s) during which such Options shall be exercisable (whether in whole or in
part) and the other terms and provisions thereof (which need not be identical).
Subject to the express provisions of the Plan, the Board of
Directors or the Committee, as the case may be, also shall have authority to
construe the Plan and the Options granted thereunder, to amend the Plan and the
Options thereunder, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and provisions of the Options
(which need not be identical) granted thereunder and to make all other
determinations necessary or advisable for administering the Plan. The Board of
Directors or the Committee, as the case may be, also shall have the authority to
require, in its discretion, as a condition of the granting of any such Option,
that the Participants agree (i) not to sell or otherwise dispose of Shares
acquired pursuant to the exercise of such Option for a period of six (6) months
following the date of the acquisition of such Option and (ii) that in the event
of termination of employment of such employee or the engagement of such
consultant, as the case may be, other than as a result of dismissal without
cause, such Participant will not, for a period to be fixed at the time of the
grant of the Option, enter into any other employment or consulting arrangement
or participate directly or indirectly in any other business or enterprise which
is competitive with the business of the Company or any subsidiary corporation or
parent corporation of the Company, or enter into any employment in which such
employee or consultant, as the case may be, will be called upon to utilize
special knowledge obtained through employment with or retention by the Company
or any subsidiary corporation or parent corporation thereof. In no event will a
Participant who is subject to the reporting requirements of Section 16(a) of the
Exchange Act be entitled to sell or otherwise dispose of any Shares acquired
pursuant to exercise of any such Options for a period of six (6) months from the
date of the acquisition of such Options.
The determination of the Board of Directors or the Committee,
as the case may be, on matters referred to in this Article III shall be
conclusive.
The Board of Directors or the Committee, as the case may be,
may employ such legal counsel, consultants and agents as it may deem desirable
for the administration of the Plan and may rely upon any opinion or computation
received from any such legal counsel, consultant or agent. Expenses incurred by
the Board of Directors or the Committee, as the case may be, in the engagement
of such counsel, consultant or agent shall be paid by the Company. No member or
former member of the Board of Directors or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any award
of Options granted hereunder.
IV. ELIGIBILITY
Options may be granted only to employees employed and
consultants engaged by the Company or of any subsidiary corporation or parent
corporation of the Company (such employees and consultants hereinafter at times
collectively referred to as the "Participants"), except as hereinafter provided,
and shall not be granted to any director who is not also an employee of the
Company. Any director who is a member of the Committee shall be ineligible to
receive an Option. In addition, any director who during the one (1) year period
prior to serving as a plan administrator, was granted Options pursuant to the
Plan, will, in accordance with Rule 16b-3, as promulgated under the Exchange
Act, be ineligible to receive an Option, unless his participation was limited
solely to participation in formula grants, an on-going broad-based employee plan
or the election to receive annual directors' fees in securities of the Company.
Incentive Stock Options shall not be granted to consultants.
The Plan does not create a right in any Participant to
participate in the Plan, to become or remain an employee of the Company, nor
does it create a right in any Participant to have any Options granted to him or
her.
V. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Non-Qualified
Option granted hereunder shall be such amount as the Board of Directors or the
Committee, as the case may be, shall deem appropriate, but in no event less than
the par value of a Share of common stock.
The price for each Share purchasable under any Incentive
Option granted hereunder shall be such amount as the Board of Directors or the
Committee, as the case may be, shall, in its best judgment, determine to be not
less than one hundred per cent (100%) of the fair market value per Share at the
date the Option is granted; provided, however, that in the case of an Incentive
Option granted to a person who, at the time such Option is granted, owns shares
of the Company or any subsidiary corporation or parent corporation of the
Company which possess more than ten per cent (10%) of the total combined voting
power of all classes of shares of the Company or of any subsidiary corporation
or parent corporation of the Company, the purchase price for each Share shall be
such amount as the Board of Directors or the Committee, as the case may be, in
its best judgment, shall determine to be not less than one hundred ten per cent
(110%) of the fair market value per Share at the date the Option is granted. In
determining stock ownership of a Participant for any purposes under the Plan,
the rules of Section 424(d) of the Code shall be applied, and the Board of
Directors or the Committee, as the case may be, may rely on representations of
fact made to it by the Participant and believed by it to be true.
If the Shares are listed on a national securities exchange in
the United States on any date on which the fair market value per Share is to be
determined, the fair market value per Share shall be deemed to be the average of
the high and low quotations at which such Shares are sold on such national
securities exchange on the date such Option is granted. If the Shares are listed
on a national securities exchange in the United States on such date, but the
Shares are not traded on such date, or such national securities exchange is not
open for business on such date, the fair market value per Share shall be
determined as of the closest preceding date on which such exchange shall have
been open for business and the Shares were traded. If the Shares are listed on
more than one national securities exchange in the United States on the date on
which the fair market value per Share is to be determined, the Board of
Directors or the Committee, as the case may be, shall determine which national
securities exchange shall be used for the purpose of determining the fair market
value per Share.
For purposes of this Plan, the determination by the Board of
Directors or the Committee, as the case may be, of the fair market value of a
Share shall be conclusive.
Upon the exercise of an Option granted hereunder, the Company
shall cause the purchased Shares to be issued only when it shall have received
the full purchase price for the Shares in cash or by certified check or such
other arrangement for the satisfaction of the full purchase price as the
Committee may determine to the extent permitted by applicable law, including but
not limited to, by delivering to the Company shares of common stock of the
Company (in proper form for transfer and accompanied by all requisite stock
transfer tax stamps or cash in lieu thereof) owned by such holder free and clear
of all liens and encumbrances having a fair market value equal to the exercise
price applicable to that portion of the Option being exercised by the delivery
of such Shares. The fair market value of the stock so delivered shall be
determined by the Committee, in its sole discretion, as of the date immediately
preceding the date on which the Option is exercised, or as may be required in
order to comply with or to conform to the requirements of any applicable laws or
regulations.
VI. USE OF PROCEEDS
The cash proceeds of the sale of Shares pursuant to the Plan
are to be added to the general funds of the Company and used for its general
corporate purposes as the Board of Directors shall determine.
VII. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
Any Option shall be exercisable at such times, in such amounts
and during such period or periods as the Board of Directors or the Committee, as
the case may be, shall determine at the date of the grant of such Option;
provided, however, that an Incentive Option shall not be exercisable after the
expiration of ten (10) years from the date such Option is granted; and provided
further that, in the case of an Incentive Option granted to a person who, at the
time such Option is granted, owns stock of the Company or any subsidiary
corporation or parent corporation of the Company possessing more than ten per
cent (10%) of the total combined voting power of all classes of stock of the
Company or of any subsidiary corporation or parent corporation of the Company,
such Option shall not be exercisable after the expiration of five (5) years from
the date such Option is granted.
Except to the extent otherwise provided under the Code, to the
extent that the aggregate fair market value of stock for which Incentive Options
are exercisable for the first time by a Participant during any calendar year
(under all stock option plans of the Company or of any parent corporation or
subsidiary corporation of the Company) exceeds one hundred thousand dollars
($100,000), such Options shall be treated as Non-Qualified Options. For purposes
of this limitation, (i) the fair market value of stock is determined as of the
time the Option is granted, and (ii) the limitation will be applied by taking
into account Options in the order in which they were granted.
Subject to the provisions of Article XVII, the Board of
Directors or the Committee, as the case may be, shall have the right to
accelerate, in whole or in part, from time to time, conditionally or
unconditionally, rights to exercise any Option granted hereunder.
To the extent that an Option is not exercised within the
period of exercisability specified therein, it shall expire as to the then
unexercised part.
In no event shall an Option granted hereunder be exercised for
a fraction of a Share.
The Committee may at any time on behalf of the Company offer
to buy out an Option previously granted, based on such terms and conditions as
the Committee shall establish and communicate to the Participant at the time
that such offer is made.
VIII. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the
optionee as to all or part of the Shares covered thereby by the giving of
written notice of the exercise thereof to the Corporate Secretary of the Company
at the principal business office of the Company, specifying the number of shares
to be purchased and specifying a business day not more than fifteen (15) days
from the date such notice is given for the payment of the purchase price against
delivery of the Shares being purchased. Subject to the terms of Articles XIII,
XV, and XVI, the Company shall cause certificates for the Shares so purchased to
be delivered to the optionee at the principal business office of the Company,
against payment of the full purchase price, on the date specified in the notice
of exercise.
IX. NON-TRANSFERABILITY OF OPTIONS
No Option granted hereunder shall be transferable, whether by
operation of law or otherwise, and any Option granted hereunder shall be
exercisable, during the lifetime of the holder, only by such holder.
X. TERMINATION OF EMPLOYMENT
Upon termination of the employment of any Participant with the
Company and all subsidiary corporations and parent corporations of the Company,
an Option previously granted to the Participant, unless otherwise specified by
the Board of Directors or the Committee, as the case may be, shall, to the
extent not theretofore exercised, terminate and become null and void, provided
that:
(a) if the Participant shall die while in
the employ of such corporation or during either the
three (3) month or one (1) year period, whichever is
applicable, specified in clause (b) below and at a
time when such Participant was entitled to exercise
an Option as herein provided, the legal
representative of such Participant, or such person
who acquired such Option by bequest or inheritance or
by reason of the death of the Participant, may, not
later than one (1) year from the date of death, but
in no event later than the expiration of the stated
term of such Option, exercise such Option, to the
extent not theretofore exercised, in respect of any
or all of such number of Shares as specified by the
Board of Directors or the Committee, as the case may
be, in such Option; and
(b) if the employment of any
Participant to whom such Option shall have
been granted shall terminate by reason of the
Participant's retirement (at such age or upon
such conditions as shall be specified by the
Board of Directors), disability (as defined in
Section 22(e)(3) of the Code) or dismissal by
the employer other than for "cause" (as
defined below), and while such Participant is
entitled to exercise such Option as herein
provided, such Participant shall have the
right to exercise such Option so granted, to
the extent not theretofore exercised, in
respect of any or all of such number of Shares
as specified by the Board of Directors or the
Committee, as the case may be, in such Option,
at any time up to and including (i) three (3)
months after the date of such termination of
employment in the case of termination by
reason of retirement or dismissal other than
for cause, and (ii) one (1) year after the
date of termination of employment in the case
of termination by reason of retirement or
disability. Notwithstanding anything to the
foregoing to the contrary contained herein,
upon the termination without cause of any
Participant who has been granted Non-Qualified
Options pursuant to the Plan, the Board of
Directors or the Committee, as the case may
be, shall have the right, in their sole
discretion (only with respect to Non-Qualified
Options granted pursuant to the Plan), to
either (i) accelerate the time period during
which a Participant may exercise all or a part
of any such Option previously granted and/or
(ii) extend the time period in which such
Participant may exercise such Option, to a
period of up to one (1) year after the date of
such Participant's termination without cause.
In no event, however, shall any person be entitled to exercise
any Option after the expiration of the period of exercisability of such Option
as specified therein.
If the Participant voluntarily terminates his or her
employment, other than by reason of his/her retirement, or is discharged for
cause, any Option granted hereunder shall, unless otherwise specified by the
Board of Directors or the Committee, as the case may be, forthwith terminate
with respect to any unexercised portion thereof.
If an Option granted hereunder shall be exercised by the legal
representative of a deceased or disabled Participant or former Participant, or
by a person who acquired an Option granted hereunder by bequest or inheritance
or by reason of death of any Participant or former Participant, written notice
of such exercise shall be accompanied by a certified copy of letters
testamentary or equivalent proof of the right of such legal representative or
other person to exercise such Option.
For the purposes of the Plan, the term "for cause" shall mean
(i) with respect to a Participant who is party to a written agreement with, or,
alternatively, participates in a compensation or benefit plan of the Company or
a subsidiary corporation or parent corporation of the Company, which agreement
or plan contains a definition of "for cause" or "cause" (or words of like
import) for purposes of termination of employment thereunder by the Company or
such subsidiary corporation or parent corporation of the Company, "for cause" or
"cause" as defined in the most recent of such agreements or plans, or (ii) in
all other cases, as determined by the Board of Directors or the Committee, as
the case may be, in its sole discretion, (a) the willful commission by a
Participant of a criminal or other act that causes or probably will cause
substantial economic damage to the Company or a subsidiary corporation or parent
corporation of the Company or substantial injury to the business reputation of
the Company or a subsidiary corporation or parent corporation of the Company;
(b) the commission by a Participant of an act of fraud in the performance of
such Participant's duties on behalf of the Company or a subsidiary corporation
or parent corporation of the Company; or (c) the continuing willful failure of a
Participant to perform the duties of such Participant to the Company or a
subsidiary corporation or parent corporation of the Company (other than such
failure resulting from the Participant's incapacity due to physical or mental
illness) after written notice thereof (specifying the particulars thereof in
reasonable detail) and a reasonable opportunity to be heard and cure such
failure are given to the Participant by the Board of Directors. For purposes of
the Plan, no act, or failure to act, on the Participant's part shall be
considered "willful" unless done or omitted to be done by the Participant not in
good faith and without reasonable belief that the Participant's action or
omission was in the best interest of the Company or a subsidiary corporation or
parent corporation of the Company.
For the purposes of the Plan, an employment relationship shall
be deemed to exist between an individual and a corporation if, at the time of
the determination, the individual was an "employee" of such corporation for
purposes of Section 422(a) of the Code. If an individual is on military, sick
leave or other bona fide leave of absence, such individual shall be considered
an "employee" for purposes of the exercise of an Option and shall be entitled to
exercise such Option during such leave if the period of such leave does not
exceed ninety (90) days, or, if longer, so long as the individual's right to
reemployment with the corporation granting the option (or a related corporation)
is guaranteed either by statute or by contract. If the period of leave exceeds
ninety (90) days, the employment relationship shall be deemed to have terminated
on the ninety-first (91st) day of such leave, unless the individual's right to
reemployment is guaranteed by statute or contract.
A termination of employment shall not be deemed to occur by
reason of (i) the transfer of a Participant from employment by the Company to
employment by a subsidiary corporation or a parent corporation of the Company,
or (ii) the transfer of a Participant from employment by a subsidiary
corporation or a parent corporation of the Company to employment by the Company
or by another subsidiary corporation or parent corporation of the Company.
In the event of the complete liquidation or dissolution of a
subsidiary corporation, or in the event that such corporation ceases to be a
subsidiary corporation, any unexercised Options theretofore granted to any
person employed by such subsidiary corporation will be deemed cancelled unless
such person is employed by the Company or by any parent corporation or another
subsidiary corporation after the occurrence of such event. In the event an
Option is to be cancelled pursuant to the provisions of the previous sentence,
notice of such cancellation will be given to each Participant holding
unexercised Options and such holder will have the right to exercise such Options
in full (without regard to any limitation set forth or imposed pursuant to
Article VII) during the thirty (30) day period following notice of such
cancellation.
XI. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
In the event of any change in the outstanding Shares through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares,
or other like change in capital structure of the Company, the Board of Directors
or the Committee, as the case may be, shall make such adjustment to each
outstanding Option that it, in its sole discretion, deems appropriate. The term
"Shares" after any such change shall refer to the securities, cash and/or
property then receivable upon exercise of an Option. In addition, in the event
of any such change, the Board of Directors or the Committee, as the case may be,
shall make any further adjustment as may be appropriate to the maximum number of
Shares which may be acquired under the Plan pursuant to the exercise of Options,
the maximum number of Shares which may be so acquired by one Participant and the
number of Shares and price per Share subject to outstanding Options as shall be
equitable to prevent dilution or enlargement of rights under such Options, and
the determination of the Board of Directors as to these matters shall be
conclusive. Notwithstanding the foregoing, (i) each such adjustment with respect
to an Incentive Option shall comply with the rules of Section 424(a) of the
Code, and (ii) in no event shall any adjustment be made which would render any
Incentive Option granted hereunder to be other than an "incentive stock option"
for purposes of Section 422 of the Code.
XII. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or on
any subsidiary corporation or parent corporation thereof to continue the
employment of any holder of Options and it shall not impose any obligation on
the part of any holder of Options to remain in the employ of the Company or of
any subsidiary corporation or parent corporation thereof.
XIII. PURCHASE FOR INVESTMENT
Except as hereinafter provided, the Board of Directors or the
Committee, as the case may be, may require a Participant, as a condition upon
exercise of any Option granted hereunder, to execute and deliver to the Company
(a) stock powers with respect to Shares underlying a particular Option and
required to be held by a custodian, and (b) a written statement, in form
satisfactory to the Board of Directors or the Committee, as the case may be, in
which the Participant represents and warrants that Shares are being acquired for
such person's own account for investment only and not with a view to the resale
or distribution thereof. The Participant shall, at the request of the Board of
Directors or the Committee, as the case may be, be required to represent and
warrant in writing that any subsequent resale or distribution of Shares by the
Participant shall be made only pursuant to either (i) a Registration Statement
on an appropriate form under the Securities Act of 1933, as amended (the
"Securities Act"), which Registration Statement has become effective and is
current with regard to the Shares being sold, or (ii) a specific exemption from
the registration requirements of the Securities Act, but in claiming such
exemption the Participant shall, prior to any offer of sale or sale of such
Shares, obtain a prior favorable written opinion of counsel, in form and
substance satisfactory to counsel for the Company, as to the application of such
exemption thereto. The foregoing restriction shall not apply to (i) issuances by
the Company so long as the Shares being issued are registered under the
Securities Act and a prospectus in respect thereof is current, or (ii)
re-offerings of Shares by affiliates of the Company (as defined in Rule 405 or
any successor rule or regulation promulgated under the Securities Act) if the
Shares being re-offered are registered under the Securities Act and a prospectus
in respect thereof is current.
XIV. ISSUE OF CERTIFICATES, LEGENDS, PAYMENT OF EXPENSES
Upon any exercise of an Option which may be granted hereunder
and, in the case of an Option, payment of the purchase price, a certificate or
certificates for the Shares shall be issued by the Company in the name of the
person exercising the Option and shall be delivered to or upon the order of such
person.
The Company may endorse such legend or legends upon the
certificates for Shares issued pursuant to the Plan and may issue such "stop
transfer" instructions to its transfer agent in respect of such Shares as, in
its discretion, it determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act, (ii) implement the provisions of the Plan and any agreement
between the Company and the optionee or grantee with respect to such Shares, or
(iii) permit the Company to determine the occurrence of a disqualifying
disposition, as described in Section 421(b) of the Code, of Shares transferred
upon exercise of an Incentive Option granted under the Plan.
The Company shall pay all issue or transfer taxes with respect
to the issuance or transfer of Shares, as well as all fees and expenses
necessarily incurred by the Company in connection with such issuance or
transfer, except fees and expenses which may be necessitated by the filing or
amending of a Registration Statement under the Securities Act, which fees and
expenses shall be borne by the recipient of the Shares, unless such Registration
Statement under the Securities Act has been filed by the Company for its own
corporate purposes (and the Company so states) in which event the recipient of
the Shares shall bear only such fees and expenses as are attributable solely to
the inclusion of the Shares he or she receives in the Registration Statement.
All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
XV. WITHHOLDING TAXES
The Company may require a Participant, if applicable,
exercising a Non-Qualified Option granted hereunder, or disposing of Shares
acquired pursuant to the exercise of an Incentive Option in a disqualifying
disposition (within the meaning of Section 421(b) of the Code), to reimburse the
corporation that employs such Participant for any taxes required by any
government to be withheld or otherwise deducted and paid by such corporation in
respect of the issuance or disposition of such Shares. In lieu thereof, the
corporation that employs such Participant shall have the right to withhold the
amount of such taxes from any other sums due or to become due from such
corporation to the Participant upon such terms and conditions as the Board of
Directors shall prescribe. The corporation that employs such Participant may, in
its discretion, hold the stock certificate to which such Participant is entitled
upon the exercise of an Option as security for the payment of such withholding
tax liability, until cash sufficient to pay that liability has been accumulated.
In addition, at any time that the Company becomes subject to a withholding
obligation under applicable law with respect to the exercise of a Non-Qualified
Option (the "Tax Date"), except as set forth below, a holder of a Non-Qualified
Option may elect to satisfy, in whole or in part, the holder's related personal
tax liabilities (an "Election") by (i) directing the Company to withhold from
Shares issuable in the related exercises either a specified number of Shares or
Shares having a specified value (in each case not in excess of the related
personal tax liabilities), (ii) tendering Shares previously issued pursuant to
the exercise of an Option or other Shares of the Company's common stock owned by
the holder, or (iii) combining any or all of the foregoing options in any
fashion. An Election shall be irrevocable. The withheld Shares and other Shares
tendered in payment shall be valued at their fair market value (determined in
accordance with the principles set forth in Article V of the Plan) on the Tax
Date. The Board of Directors or the Committee, as the case may be, may
disapprove of any Election, suspend or terminate the right to make Elections or
provide that the right to make Elections shall not apply to particular Shares or
exercises. The Board of Directors or the Committee, as the case may be, may
impose any additional conditions or restrictions on the right to make an
Election as it shall deem appropriate.
XVI. LISTING OF SHARES AND RELATED MATTERS
The Board of Directors or the Committee, as the case may be,
may delay any award, issuance or delivery of Shares if it determines that
listing, registration or qualification of Shares or the consent or approval of
any governmental regulatory body is necessary or desirable as a condition of, or
in connection with, the sale or purchase of Shares under the Plan, until such
listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board of Directors or the Committee, as the case may be.
XVII. AMENDMENT OF THE PLAN
The Board of Directors or the Committee, as the case may be,
may, from time to time, amend the Plan, provided that no amendment shall be
made, without the approval of the stockholders of the Company, to the extent
required by Rule 16b-3 or for the exception for performance-based compensation
under Section 162(m) of the Code, that will (i) increase the total number of
Shares reserved for Options under the Plan (other than an increase resulting
from an adjustment provided for in Article XI), (ii) reduce the exercise price
of any Option granted hereunder, (iii) modify the provisions of the Plan
relating to eligibility, or (iv) materially increase the benefits accruing to
Participants under the Plan or extend the maximum option period under Section
VII. The Board of Directors or the Committee, as the case may be, shall be
authorized to amend the Plan and the Options granted thereunder to permit the
Incentive Options granted thereunder to qualify as incentive stock options
within the meaning of Section 422 of the Code. The rights and obligations under
any Option granted before amendment of the Plan or any unexercised portion of
such Option shall not be adversely affected by amendment of the Plan or Option
without the consent of the holder of such Option.
XVIII. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors or the Committee, as the case may be,
may at any time suspend or terminate the Plan. The Plan, unless sooner
terminated under Article XXI or by action of the Board of Directors, shall
terminate at the close of business on the Termination Date. Options may not be
granted while the Plan is suspended or after it is terminated. Rights and
obligations under any Option granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the Plan, except upon the
consent of the person to whom the Option was granted. The power of the Board of
Directors to construe and administer any Options granted prior to the
termination or suspension of the Plan under Article III nevertheless shall
continue after such termination or during such suspension.
XIX. GOVERNING LAW
The Plan and such Options as may be granted thereunder and all
related matters shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida from time to time obtaining or such other
jurisdiction as the Company may become reincorporated under.
XX. PARTIAL INVALIDITY
The invalidity or illegibility of any provision hereof shall
not be deemed to affect the validity of any other provision.
XXI. EFFECTIVE DATE
The Plan shall become effective upon its approval by the
Shareholders of the Company.
APPENDIX E
AMERICAN BODY ARMOR & EQUIPMENT, INC.
1996 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The 1996 Non-Employee Directors Stock Option Plan (the "Plan")
is established to attract, retain and compensate for service as members of the
Board of Directors of American Body Armor & Equipment, Inc. (the "Company")
highly qualified individuals who are not current or former employees of the
Company and to enable them to increase their ownership in the Company's Common
Stock. The Plan will be beneficial to the Company and its shareholders since it
will allow these directors to have a greater personal financial stake in the
Company through the ownership of Company stock, in addition to underscoring
their common interest with shareholders in increasing the value of the Company
stock longer term.
1. Eligibility
All members of the Company's Board of Directors who are not
current or former employees of the Company or any of its subsidiaries
("Non-Employee Directors") are eligible to participate in the Plan.
2. Options
Only nonqualified stock options ("NQSOs") may be granted under
the Plan. Grants shall be evidenced by Option Agreements in form promulgated by
the Board of Directors from time to time.
3. Shares Available
a) Number of Shares Available: There is hereby reserved for
issuance under the Plan 300,000 shares of Company Common Stock, par value
$.01 per share, which may be authorized but unissued shares, treasury shares,
or shares purchased on the open market.
b) Recapitalization Adjustment: In the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of the Company, adjustments in the number and
kind of shares authorized by the Plan, in the number and kind of shares
covered by, and in the option price of outstanding NQSOs under the Plan
shall be made if, and in the same manner as, such adjustments are made to
NQSOs issued under the Company's 1996 Stock Option Plan.
4. Annual Grant of Nonqualified Stock Options
Each year on the day of the Company's annual meeting of
shareholders, each individual elected, reelected or continuing as a Non-Employee
Director shall automatically receive NQSOs covering 25,000 shares of Company
Common Stock. Notwithstanding the foregoing, if, on that day, the counsel for
the Company determines, in her/his sole discretion, that the Company is in
possession of material, undisclosed information about the Company, then the
annual grant of NQSOs to Non-Employee Directors shall be suspended until the
second day after public dissemination of such information and the price,
exercisability date and option period shall then be determined by reference to
such later date. If Company Common Stock is not traded on the American Stock
Exchange or on such exchange as such stock may then be trading on any date a
grant would otherwise be awarded, then the grant shall be made the next day
thereafter that Company Common Stock is so traded.
5. Option Price
The price of the NQSO shall be the closing price on the date
of the grant of the Company's Common Stock as quoted on the composite tape of
the American Stock Exchange or of such exchange upon which the Company's Common
Stock may then currently be trading.
6. Option Period
Except as otherwise provided herein, a NQSO granted under the
Plan shall become exercisable no earlier than three years from the date of the
grant and shall expire ten years after date of the grant ("Option Period").
7. Payment
The NQSO price shall be paid in cash in U.S. dollars at
the time the NQSO is exercised.
8. Cessation of Service
Upon cessation of service as a Non-Employee Director (for
reasons other than retirement, death, disability or "cause"), only those NQSOs
immediately exercisable at the date of cessation of service shall be exercisable
by the grantee. Such NQSOs must be exercised within ninety days of cessation of
service (but in no event after the expiration of the Option Period) or they
shall be forfeited.
(a) Retirement
If a grantee ceases service as a Non-Employee Director and is
at least age 65 with ten or more years of service or age 70 with five or more
years of service, then any of his/her outstanding NQSOs shall continue to become
exercisable. All outstanding NQSOs must be exercised by the earlier of (i)
thirty-six (36) months following the date of such cessation of service or (ii)
the expiration of the Option Period, or such NQSOs shall be forfeited.
(b) Disability
If a grantee ceases service as a Non-Employee Director on
account of disability, then those of his/her NQSOs which had been held for at
least twelve (12) months on the date of cessation of service shall become
immediately exercisable. All NQSOs which became exercisable upon cessation of
service following disability and those NQSOs which were exercisable on the date
of such termination of employment following disability must be exercised by the
earlier of (i) six (6) months following the date of such cessation of service or
(ii) the expiration of the Option Period, or such NQSOs shall be forfeited.
"Disability" shall mean total and permanent disability as
defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
(c) Death
Upon the death of a grantee, those NQSOs which had been held
for at least twelve months at date of death shall become immediately exercisable
upon death. The NQSOs which become exercisable upon the date of death and those
NQSOs which were exercisable on the date of death may be exercised by the
grantee's legal representatives or heirs by the earlier of (i) thirty-six (36)
months from the date of death or (ii) the expiration of the Option Period; if
not exercised by the earlier of (i) or (ii), such NQSOs shall be forfeited.
(d) Cause
Upon removal of a Non-Employee Director, failure to stand for
reelection or failure to be renominated for "cause," or if the Company obtains
or discovers information after termination of service of a Non-Employee Director
that would have justified his/her removal for cause during such directorship,
all outstanding Options granted to such Non-Employee Director pursuant to this
Plan shall, upon giving written notice thereof by the Company, shall immediately
terminate and shall be null and void.
"Cause" shall mean an act or a failure to act that constitutes
"cause" for removal of a director under applicable Delaware law.
9. Administration and Amendment of the Plan
The Plan shall be administered by the Compensation Committee
of the Board of Directors of the Company. The Plan may be terminated or amended
by the Board of Directors as it deems advisable. However, an amendment revising
the price, date of exercisability, option period of, or amount of shares under a
NQSO shall not be made more frequently than every six (6) months unless
necessary to comply with applicable laws or regulations. No amendment may revoke
or alter in a manner unfavorable to the grantees any NQSOs then outstanding, nor
may the Board of Directors amend the Plan without shareholder approval where the
absence of such approval would cause the Plan to fail to comply with Rule 16b-3
under the Securities Exchange Act of 1934 (the "Act"), or any other requirement
of applicable law or regulation. A NQSO may not be granted under the Plan after
December 31, 2006 but NQSOs granted prior to that date shall continue to become
exercisable and may be exercised according to their terms.
10. Non-transferability
No NQSO granted under the Plan is transferable other than by
will or the laws of descent and distribution. During the grantee's lifetime, a
NQSO may only be exercised by the grantee or the grantee's guardian or legal
representative.
11. Compliance with SEC Regulations
It is the Company's intent that the Plan comply in all
respects with Rule 16b-3 of the Act, and any regulations promulgated thereunder.
If any provision of the Plan is later found not to be in compliance with the
Rule, the provision shall be deemed null and void. All grants and exercises of
NQSOs under the Plan shall be executed in accordance with the requirements of
Section 16 of the Act, as amended, and any regulations promulgated thereunder.
12. Disinterested Person Status
Notwithstanding anything contained herein to the contrary,
neither the Board of Directors nor any person designated to assist the Board of
Directors in the administration of the Plan may take any action which would
cause any Non-Employee Director of the Company to cease to be a "disinterested
person" for purposes of Rule 16b-3 with regard to this Plan or any other stock
option or other equity plan of the Company. In particular, to the extent
required as aforesaid, the Board of Directors shall not have any discretion as
to:
(i) the selection of Non-Employee
Directors who are eligible to receive awards of Stock Options;
(ii) the number of Stock Options
awarded to any Non-Employee Director.
13. Restrictions on Delivery and Sale of Shares
Each award granted under the Plan is subject to the condition
that if at anytime the Compensation Committee, in its discretion, shall
determine that the listing, registration or qualification of the stock covered
by such award upon any securities exchange or under any state or federal law is
necessary or desirable as a condition of or in connection with the granting of
such award or the purchase or delivery of stock thereunder, the delivery of any
or all shares pursuant to such award may be withheld unless and until such
listing, registration or qualification shall have been effected. If a
registration statement is not in effect under the Securities Act of 1933 or any
applicable state securities laws with respect to the shares of stock purchasable
or otherwise deliverable under awards then outstanding, the Compensation
Committee may require, as a condition of any delivery of stock pursuant to the
award a written representation, from the recipient, that such shares are being
acquired for investment and not with a view to distribution and agreeing that
the stock will not be disposed of except pursuant to an effective registration
statement, unless the Company shall have received an opinion of counsel that
such disposition is exempt from such requirement under the Securities Act of
1933 and any applicable state securities laws. The Company may endorse on
certificates representing shares delivered pursuant to an award such legends
referring to the foregoing representations or restrictions or any applicable
restrictions applicable on resale as the Company, in its discretion, shall deem
appropriate.
14. Miscellaneous
Except as provided in the Plan, no Non-Employee Director shall
have any claim or right to be granted a NQSO under the Plan. Neither the Plan
nor any action thereunder shall be construed as giving any director any right to
be retained in the service of the Company.
15. Effective Date
The Plan shall be effective on such date as shareholder
approval is obtained.
