<PAGE>
As filed with the Securities and Exchange Commission on October 11, 1996
Registration No. 333-8533
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
AMENDMENT NO.1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
ARMOR HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 3842 59-3392443
(State or other jurisdiction Primary Standard Industrial (I.R.S.Employer
of Incorporation) Classification Code Number) Identification No.)
____________________
191 Nassau Place Road
Yulee, Florida 32097
(904) 261-4035
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
____________________
Warren B. Kanders
Chairman of the Board of Directors
Armor Holdings, Inc.
191 Nassau Place Road
Yulee, Florida 32097
(904) 261-4035
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
____________________
with copies to:
Robert L. Lawrence, Esq.
Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
(212) 541-6222
____________________
Approximate date of commencement of proposed sale to public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check, the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================
Title of Each Proposed Proposed
Class of Maximum Maximum Amount of
Securities Amount Offering Price Aggregate Registration
to be Registered to be Registered Per Share(1) Offering Price(1)(2) Fee(3)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 4,560,217 $6.97/$6.75 $31,773,712 $10,956.45
=======================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the high and low sale
prices for the Common Stock on the American Stock Exchange on July 17,
1996, of $6.97 per share for 4,510,217 shares and $6.75 per share for
50,000 shares, on October 7, 1996.
(2) Includes 4,510,217 shares to be registered hereunder at a proposed maximum
aggregate offering price of $6.97 per share, plus 50,000 shares to be
registered hereunder at a proposed maximum aggregate offering price of
$6.75 per share.
(3) Includes $10,840.07 previously paid to the Commission and $116.38 being
paid to the Commission in connection with the additional registration of
50,000 shares pursuant to this Amendment No. 1 to Form S-3.
The Company hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Company
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to Section 8(a), may determine.
<PAGE>
Prospectus
- ----------
4,560,217 Shares of Common Stock,
Par Value $.01 Per Share
ARMOR HOLDINGS, INC.
This prospectus (the "Prospectus") relates to the offer and sale of a
total of 4,560,217 shares (the "Shares") of the common stock, par value $.01 per
share (the "Common Stock"), of Armor Holdings, Inc., a Delaware corporation (the
"Company"), of which: (i) 2,300,000 shares are issuable upon conversion of the
Company's 5% Convertible Subordinated Notes due April 30, 2001 (the "Notes");
(ii) 1,980,217 shares are owned by Kanders Florida Holdings, Inc. ("KFH"); and
(iii) an aggregate of 280,000 shares are owned by certain other stockholders.
The shares owned by KFH are deemed to be beneficially owned by Warren B.
Kanders, because Mr. Kanders is the sole director and sole stockholder of KFH.
Each Note entitles the registered holder thereof to convert the unpaid
principal balance of the Note into shares of Common Stock at a conversion price
of $5.00 per share at any time prior to April 30, 2001. The conversion price is
subject to adjustment under certain circumstances. The Company may redeem the
Notes at par at any time two years after issuance, or at any time after their
issuance if the closing price of the Common Stock is equal to or exceeds $7.50
per share for 10 consecutive trading days and the shares of Common Stock
underlying the Notes have been registered under the Securities Act of 1933, as
amended (the "Securities Act"). In the event the Company elects to redeem the
Notes, the holders of the Notes will have the option to convert the Notes into
shares of the Company's Common Stock at a conversion price of $5.00 per share
prior to such redemption, subject to adjustment as set forth in that certain
Convertible Subordinated Note Purchase Agreement dated April 30, 1996, by and
among the Company and each Note holder (the "Convertible Subordinated Note
Purchase Agreement").
The Shares may be offered or sold by the holders of the Notes and the
other parties listed as selling stockholders under the caption "Selling
Stockholders" appearing hereinafter (the "Selling Stockholders"). The Company
will not receive any of the proceeds from the sale of the Shares. See "Selling
Stockholders."
The Selling Stockholders may be deemed to be "underwriters" as that term
is defined in the Securities Act. The Selling Shareholders may offer their
respective Shares for sale from time to time, and, if and when offers and/or
sales are made, may be made through customary brokerage channels either through
broker-dealers acting as principals who may then resell the shares on the
American Stock Exchange or on such other market as the shares of the Company's
Common Stock may then be trading, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of Shares for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation as to any particular broker-dealer may be in excess of
<PAGE>
customary commissions); sales may be at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices, or by a combination of such
methods. The period of distribution of the Shares may occur over an extended
period of time. The Company has no interest in, and will receive no proceeds
from, any sales of the Shares. The Company will not pay or assume brokerage
commissions or discounts incurred in the sale of any of the Shares. See "Selling
Stockholders."
The Common Stock is traded on the American Stock Exchange under the symbol
"ABE". On October 7, 1996, the closing price of the Common Stock on the American
Stock Exchange was $6.75.
This offering involves a high degree of risk. For a discussion of certain
factors to be considered in evaluating an investment in the Shares, see "Risk
Factors," which begins on Page 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is October _____, 1996.
ii
<PAGE>
AVAILABLE INFORMATION
This Prospectus is part of a Registration Statement on Form S-3, which has
been filed with the Securities and Exchange Commission (the "SEC"). This
Prospectus, which constitutes an integral part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the SEC. For further information with respect to the Company and
the securities offered hereby, reference is made to the Registration Statement,
including the exhibits filed as a part thereof and the documents incorporated by
reference therein. Statements contained in this Prospectus as to the contents of
any contract, agreement or any other document are not necessarily complete and,
in each instance, reference is made to the copy of such contract, agreement or
document filed as an exhibit to the Registration Statement, each such statement
being qualified in its entirety by such reference.
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith is required to file periodic reports, proxy statements and
other information with the SEC relating to its business, financial statements
and other matters. Such periodic reports, proxy statements and other information
filed with the SEC are available for inspection and copying at the public
reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. Such periodic reports, proxy statements
and other information may be inspected and copied at the public reference
facilities maintained by the SEC at the SEC's regional offices located at
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661,
1376 Peachtree Street, N.E., Suite 788, Atlanta, Georgia 30367 and Seven World
Trade Center, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549 at prescribed rates.
The Company's Common Stock is traded on the American Stock Exchange under
the symbol "ABE." Periodic reports, proxy statements and other information filed
with the SEC can also be inspected at the American Stock Exchange, 86 Trinity
Place, New York, New York 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates into this Prospectus by reference the
following documents and the exhibits thereto previously filed with the SEC
pursuant to the Exchange Act:
1. Annual Report on Form 10-KSB (as amended on Form 10-KSB/A-1 on April
29, 1996) for the fiscal year ended December 31, 1995;
2. Current Report on Form 8-K, dated February 1, 1996;
3. Current Report on Form 8-K, dated May 14, 1996;
iii
<PAGE>
4. Registration Statement on Form 8-A, filed on March 13, 1996,
pursuant to which the Company's Common Stock was registered under
the Exchange Act;
5. Definitive Proxy Statement dated July 1, 1996, relating to the
Annual Meeting of Stockholders held on July 16, 1996;
6. Quarterly Report on Form 10-QSB for the quarterly period ended March
31, 1996.
7. Current Report on Form 8-K, dated July 30, 1996;
8. Quarterly Report on Form 10-QSB for the quarterly period ended June
30, 1996;
9. Current Report on Form 8-K dated September 3, 1996; and
10. Current Report on Form 8-K, dated October 9, 1996.
In addition, all reports and other documents filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering of the Shares
shall be deemed to be incorporated herein by reference and to be a part hereof
from the date of filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated or deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified, or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person who receives a
Prospectus, upon the written request of such person, a copy of any of the
aforementioned documents, and all exhibits and amendments thereto, including the
financial statements and schedules, as filed with the SEC. Written requests for
such copies should be directed to the Company's Corporate Secretary at c/o Armor
Holdings, Inc., 191 Nassau Place Road, Yulee, Florida 32097, (904) 261-4035.
iv
<PAGE>
TABLE OF CONTENTS
AVAILABLE INFORMATION..................................................... iii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... iii
PROSPECTUS SUMMARY.......................................................... 1
RISK FACTORS................................................................ 5
USE OF PROCEEDS............................................................ 12
SELLING STOCKHOLDERS....................................................... 12
NIK ACQUISITION............................................................ 17
DTCoA ACQUISITION.......................................................... 18
UNAUDITED PRO FORMA FINANCIAL STATEMENTS................................. PF-1
BUSINESS................................................................... 22
PROPERTIES................................................................. 33
PLAN OF DISTRIBUTION....................................................... 34
LEGAL MATTERS.............................................................. 35
EXPERTS.................................................................... 35
ADDITIONAL INFORMATION..................................................... 36
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
more detailed information, including the Company's financial statements
(including the notes thereto), appearing elsewhere in this Prospectus. Terms
used but not defined in this Prospectus Summary have the meanings ascribed to
them elsewhere in this Prospectus. Cross references in this Prospectus are to
the captions of sections of this Prospectus.
The Company
The Company's predecessor was incorporated in January 1969, under the laws
of the State of New York under the name American Body Armor & Equipment, Inc.
(the "New York Corporation"). In February 1983, the New York Corporation moved
its operation to Florida. Effective January 1, 1984, the New York Corporation
was merged with and into Armour of Fernandina Beach, Inc. ("Armour"), a Florida
corporation incorporated in October 1980, which prior to such merger (the
"Armour Merger") had been a separate but affiliated entity of the New York
Corporation. Pursuant to the Armour Merger, Armour remained as the surviving
entity and subsequently changed its name to American Body Armor & Equipment,
Inc. ("ABA"). On August 21, 1996 (the "Effective Time"), in order to effect a
change in domicile from Florida to Delaware (the "Reincorporation"), ABA was
merged with and into Armor Holdings, Inc., a Delaware corporation. Prior to the
Effective Time, Armor Holdings, Inc. had been a wholly-owned subsidiary
corporation of ABA organized for the purpose of effecting the Reincorporation.
At the Effective Time, Armor Holdings, Inc. (the "Company") became the surviving
entity of the merger pursuant to which the Reincorporation was completed. The
merged entity is governed by the Delaware General Corporation Law ("DGCL") and
the certificate of incorporation (the "Charter") and bylaws of the Company.
Since its founding, the Company has been engaged in the development,
manufacture and distribution of bullet and projectile resistant garments,
including 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's products are used by, among others,
police and other law enforcement and security personnel as well as the military.
The Company's products are sold through a nationwide independent sales
representative and distributor network primarily to international and domestic
law enforcement agencies, the United States military, various federal government
agencies, federal and state correctional facilities, highway patrols and
sheriffs' departments.
<PAGE>
The Company manufactures two basic types of body armor: (i) concealable
armor, which is generally intended to be worn beneath the user's clothing; and
(ii) tactical armor, which is worn externally and is designed to protect more
coverage area and defeat higher level ballistic threats incorporating ballistic
hard armor plates.
The Company manufactures and distributes a wide range of products,
including explosive ordnance disposal and handling equipment, bomb disposal
suits, bomb protection blankets and letter bomb suppression pouches; knife
resistant vests designed primarily for use by personnel in correctional
facilities and other law enforcement employees who are exposed to threats from
sharp instruments; and a variety of hard armor and ballistic shields, as well as
upgrade armor plates. The Company manufactures a variety of specialty products,
including non-ballistic load bearing vests, armored press vests, executive
vests, raincoats and fireman turnout coats. The Company also manufactures
specialty armor applications for vehicles and aircraft, as well as armor for
stationary protection. In addition, the Company has the exclusive rights in the
United States to distribute Gallet(R) helmets, and the non-exclusive rights to
distribute Scanna(R) letter bomb and Madis(R) car bomb detectors.
The Company's business strategy is twofold: (i) to increase its channels
of distribution through internal growth and strategic acquisitions; and (ii) to
increase channel utilization by expanding the number of products and services
offered. The Company believes that internal growth and strategic acquisitions
will enable the Company to leverage its existing infrastructure and operations
to achieve improved operating margins.
As part of its acquisition strategy, on July 15, 1996, and September 30,
1996, respectively, the Company purchased certain assets of the NIK Public
Safety Product Line ("NIK Public Safety") from Ivers-Lee Corporation
("Ivers-Lee") and substantially all of the assets of Defense Technology
Corporation of America, a Wyoming corporation ("DTCoA").
NIK Public Safety is the leading manufacturer and distributor of portable
narcotic identification kits used for the identification of narcotic substances
by law enforcement agencies. In addition, NIK Public Safety distributes the
Flex-Cuf restraint, a patented disposable restraint manufactured by Thomas &
Betts, as well as specimen collection kits, evidence collection kits and tamper
guard evidence tape.
DTCoA is a leading manufacturer and distributor of less-than-lethal and
anti-riot products including pepper sprays, distraction devices, flameless
expulsion grenades, specialty impact munitions and dry powdered oleoresin
capsicum to law enforcement agencies and military and correctional services in
the United States and abroad. DTCoA, which is based in Casper, Wyoming, also
distributes other similar products including gas masks, riot helmets and gun
holsters. See "Risk Factors-Rapid Growth Through Acquisitions," "NIK
Acquisition," and "DTCoA Acquisition."
The Company maintains its executive offices at 191 Nassau Place Road,
Yulee, Florida 32097. Its telephone number is (904) 261-4035.
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<PAGE>
The Offering
This Prospectus relates to the offer and sale of a total of 4,560,217
shares (the "Shares") of common stock, $.01 par value (the "Common Stock") of
the Company, of which: (i) 2,300,000 shares are issuable upon conversion of the
Company's 5% Convertible Subordinated Notes due April 30, 2001 (the "Notes");
(ii) 1,980,217 shares are owned by KFH; and (iii) an aggregate of 280,000 shares
are owned by certain other shareholders (collectively the "Selling
Stockholders").
Each Note entitles the registered holder thereof to convert the unpaid
principal balance of the Note into shares of Common Stock at an exercise price
of $5.00 per share at any time prior to April 30, 2001. The Note exercise price
is subject to adjustment under certain circumstances, as more fully described
therein. The Notes are subject to full or partial redemption by the Company on a
pro rata basis on 15 days' prior written notice at any time prior to the
maturity of the Notes and after April 30, 1998 or, at any time whether prior to
or after April 30, 1998, if the closing price of the Common Stock on the
American Stock Exchange for 10 consecutive trading days is in excess of $7.50
per share and the shares of Common Stock underlying the Notes have been
registered under the Securities Act. In the event of a redemption the holders of
the Notes shall be entitled to require the Company to convert the portion of the
Note being redeemed into registered shares of the Company's Common Stock. The
Shares offered may be offered or sold by the Selling Stockholders. The Company
will not receive any of the proceeds from the sale of the Shares. See "Selling
Stockholders."
There are, as of October 8, 1996, 7,827,129 shares of Common Stock
outstanding (not including the 2,300,000 Shares issuable upon conversion of the
Notes), and options to purchase an additional 1,367,033 shares. In addition,
39,886 shares of Common Stock are reserved for issuance upon conversion of the
Company's 3% Convertible, $1.00 stated value Preferred Stock (the "Old Preferred
Stock") by holders who have not yet submitted their shares of Old Preferred
Stock for conversion. The Shares offered hereby constitute approximately 45% of
all shares of the Company's outstanding Common Stock (without giving effect to
the exercise of outstanding options and the conversion of the Old Preferred
Stock). The sale of Shares by the Selling Stockholders, if and when made, may be
made through customary brokerage channels either through broker-dealers acting
as agents or brokers for the Selling Stockholders, or through broker-dealers
acting as principals who may then resell the Shares on the American Stock
Exchange or such other market as the Shares may then be trading on, or
otherwise, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of Shares for whom such broker-dealers may act as agent or to whom
they sell as principal or both (which compensation as to any particular
broker-dealer may be in excess of customary
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<PAGE>
commissions); sales may be at fixed prices which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, or at negotiated prices, or by a combination of such methods. The
period of distribution of the Shares may occur over an extended period of time.
The Company has no interest in, and will receive no proceeds from, any sales of
the Shares. The Company will not pay or assume brokerage commissions or
discounts incurred in the sale of any of the Shares. See "Selling Stockholders."
Risk Factors
The securities offered hereby involve a high degree of risk. The
information presented under the caption "Risk Factors" in this Prospectus should
be carefully considered. Risk factors to be considered include, but are not
limited to, the following: (i) a reliance on governmental spending; (ii) risks
inherent in doing business internationally; (iii) products liability; (iv)
competition and technical obsolescence of the Company's products; (v) the
ability of the Company to protect its proprietary know-how and trade secrets, as
well as the development by other companies of more effective technologies which
render the Company's trade secrets obsolete; (vi) the Company's prior bankruptcy
and negative economic factors which may adversely affect the Company's future
performance; (vii) the ability of the Company to carry out its acquisition
strategy and integrate and manage businesses which it acquires; (viii) the
ability of the Company to obtain additional financing; (ix) the ability of the
Company to redeem the Notes in the event the holders thereof elect not to
convert such Notes into shares of Common Stock; (x) the control over the Company
by certain stockholders; (xi) the Company's reliance upon certain key personnel;
(xii) the potential antitakeover effect of certain provisions of the Company's
Charter; (xiii) the dilutive effect on the Company's stockholders of sales of
the shares of Common Stock: (1) into which the Notes are convertible; (2) held
by Ivers-Lee; (3) held by DTCoA; (4) held by Key Bank of Wyoming; and (5) shares
which the Company intends to register and sell for its own account and other
shares of Common Stock held by certain third parties as well as the exercise of
outstanding options to purchase the Company's Common Stock; (xiv) the lack of
dividends paid on the Common Stock; (xv) the volatility of the market price for
the Common Stock; (xvi) the reservation of issuance of a substantial number of
shares of Common Stock; and (xvii) potential sales pursuant to Rule 144. See
"Risk Factors."
-4-
<PAGE>
RISK FACTORS
The securities offered in this Prospectus involved a high degree of risk
and should not be purchased by persons who cannot afford the loss of their
entire investment. Accordingly, prospective investors should consider carefully
the following factors, in addition to the other information concerning the
Company and its business contained in this Prospectus.
Concentration of Business Activities; Reliance Upon Governmental Spending
The Company's products are sold nationally and internationally, primarily
to law enforcement agencies and military services. Sales to domestic law
enforcement agencies, including government, security and intelligence agencies,
police departments, federal and state correctional facilities and highway patrol
and sheriffs' departments comprise the largest portion of the Company's
business. Accordingly, any substantial reduction in governmental spending or
change in emphasis in defense and law enforcement programs would have a material
adverse effect on the Company's business.
International Sales
The Company's expansion plans and its current sales are subject to certain
risks inherent in doing business on an international level, such as unexpected
changes in regulatory requirements, tariffs, customs, duties and other trade
restrictions, export licenses, difficulties in staffing and managing foreign
operations, political instability, insurrection and other political risks,
fluctuations in currency exchange rates, limitations on technology imports,
delays from custom brokers or government agencies and potentially adverse tax
consequences any or all of which could adversely impact the success of the
Company's planned international business expansion, as well as the current level
of sales the Company presently enjoys. There can be no assurances that these or
other factors will not have an adverse affect on the Company's business
generally.
Product Liability
The products manufactured by the Company are used in applications where
the failure of such products could result in serious personal injury and death.
The Company maintains product liability insurance in the amount of $15,000,000
per occurrence and $15,000,000 in the aggregate, excluding legal fees, which are
borne by the insurance carriers, less a deductible of $25,000. There is no
assurance that these amounts would be sufficient to cover the payment of any
potential claim. In addition, there is no assurance that this or any other
insurance coverage will continue to be available or, if available, that the
Company will be able to obtain it at a reasonable cost. Any substantial
uninsured loss would have to be paid out of the assets of the Company and may
have a material adverse effect on the Company's financial condition and
operations. In addition, the inability to obtain product liability coverage
would prohibit the Company from bidding for orders for certain municipal
customers since, at present, many municipal bids require such coverage, and any
such inability would have a material adverse effect on the Company's financial
condition and results of operations.
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<PAGE>
Competition/Technical Obsolescence
The industry in which the Company does business is highly competitive and
the Company competes with a number of companies that are as established as the
Company. In addition, the Company's competitors may develop and/or improve their
products in which event the Company's products may be rendered obsolete or less
marketable. Although the Company is not aware of any new materials or products
that have recently been or will soon be introduced into the market which might
render the Company's products obsolete and result in a loss of its market share,
no assurances can be given that such materials and products will not be
developed or introduced into the market in the future. In addition, as
manufacturing technology changes, there can be no assurance that the Company
will continue to be able to manufacture its products at competitive prices.
Patent Protection and Proprietary Information
Several of the products manufactured and sold by the Company are subject
to manufacturing processes for which the Company holds United States and foreign
patents. The Company also relies on trade secrets, proprietary know-how and
technological innovation to develop and maintain its competitive position. There
can be no assurance that the patents will protect the Company from competing
technology or that, insofar as it relies on trade secrets and unpatented
technology, others will not independently develop similar technology or that
secrecy will not be breached. See "Business-Patent Protection and Proprietary
Information."
Prior Bankruptcy of the Company and Other Legal Matters
In May 1992, the Company filed for relief under Chapter 11 of the United
States Bankruptcy Code. The bankruptcy filing was the result of a general
decline in the Company's operations, which included significant operating losses
in 1989 and 1991, and the inability to collect a $1.5 million receivable related
to the shipment of vests to a Middle East customer in April 1991. The Company
emerged from bankruptcy protection effective September 20, 1993, upon
confirmation by the United States Bankruptcy Court for the Middle District of
Florida, Jacksonville Division (the "Bankruptcy Court") of the Company's Third
Amended and Restated Plan of Reorganization (the "Plan of Reorganization").
Despite the Company's emergence from bankruptcy protection, there can be no
assurance that the Company will not experience further operating losses or be
susceptible to other negative economic factors which may adversely affect the
Company's future performance.
Rapid Growth Through Acquisitions
The Company plans to grow largely through acquisition and is therefore
actively evaluating investments in operating businesses. The Company intends to
diversify through acquisition and expand its business operations through the
consolidation of one or more companies in the same or similar businesses,
including those that manufacture and/or supply products or services to law
enforcement, military and certain sectors of the security services industry.
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<PAGE>
On July 15, 1996, the Company, through its newly formed wholly-owned
subsidiary NIK Public Safety, Inc., a Delaware corporation ("NIK") acquired
certain assets (the "NIK Assets") of the NIK Public Safety Product Line ("NIK
Public Safety") from Ivers-Lee Corporation ("Ivers-Lee"). NIK Public Safety is
the leading manufacturer and distributor of portable narcotic identification
kits used for the identification of narcotic substances by law enforcement
agencies. In addition, NIK Public Safety distributes the Flex-Cuf restraint, a
patented disposable restraint manufactured by Thomas & Betts, as well as
specimen collection kits, evidence collection kits and tamper guard evidence
tape. See "NIK Acquisition."
On September 30, 1996, the Company, through its newly formed wholly-owned
subsidiary Defense Technology Corporation of America, a Delaware corporation
("DTC") acquired substantially all of the assets (the "DTCoA Assets") of Defense
Technology Corporation of America, a Wyoming corporation ("DTCoA"), based in
Casper, Wyoming. DTCoA is a leading manufacturer and distributor of
less-than-lethal products including pepper sprays, distraction devices,
flameless expulsion grenades, specialty impact munitions and dry powdered
oleoresin capsicum to law enforcement agencies and military services in the
United States and abroad. In addition, DTCoA distributes other similar products
including gas masks, riot helmets and gun holsters. See "DTCoA Acquisition."
While the Company intends to grow aggressively through acquisition, there
can be no assurances that the Company will: (i) be able to identify and/or
acquire other suitable acquisition candidates on acceptable terms; (ii) be
successful in managing the combined operations of the entities acquired; or
(iii) be able to effectively and profitably integrate acquired operations into
its business. Additionally, there can be no assurances that any future
acquisitions will not have a material adverse effect on the Company's operating
results, particularly during the period immediately following such acquisitions.
See "Business."
5% Convertible Subordinated Notes
On April 30, 1996, the Company completed a private placement of its 5%
Convertible Subordinated Notes due April 30, 2001 (the "Notes") pursuant to
which $11,500,000 aggregate principal amount of Notes were sold by the Company
under a Convertible Subordinated Note Purchase Agreement dated as of April 30,
1996 (the "Convertible Subordinated Note Purchase Agreement"). The following
description of the Note offering, the Convertible Subordinated Note Purchase
Agreement and the Notes is not intended to be complete and is qualified in its
entirety by the complete texts of the form of Convertible Subordinated Note
Purchase Agreement and the form of Note.
The Notes bear interest at 5% per annum, mature five years from the date
of issuance, and are subordinated to all existing and future Senior Indebtedness
of the Company, as defined and as more fully set forth in the Convertible
Subordinated Note Purchase Agreement. In addition, the Notes may be convertible
into shares of Common Stock of the Company at the option of the holder thereof
at any time prior to the maturity date at a conversion price of $5.00 per share,
subject to adjustment as set forth in the Convertible Subordinated Note Purchase
Agreement.
-7-
<PAGE>
The Company may redeem the Notes at par at any time two years after
issuance, or at any time after their issuance if the closing price of the Common
Stock is equal to or exceeds $7.50 per share for 10 consecutive trading days and
the shares of Common Stock underlying the Notes have been registered under the
Securities Act. In the event the Company elects to redeem the Notes, the holders
of the Notes will have the option to convert the Notes into shares of the
Company's Common Stock at a conversion price of $5.00 per share prior to such
redemption, subject to adjustment as set forth in the Convertible Subordinated
Note Purchase Agreement.
The Company presently expects that the Notes will be converted to Common
Stock (dilutive to common stockholders). In the event that the Notes are not
converted, the Company will require additional financing to repay the Notes upon
their maturity on April 30, 2001. There can be no assurances that the Company
will be able to obtain adequate replacement financing on terms acceptable to it
or at all.
Need For Additional Financing
As of May 1, 1996, the Company reduced its credit facility with LaSalle
Business Credit, Inc. ("LaSalle") to a zero balance. Effective June 30, 1996,
the financing agreement with LaSalle expired and was not renewed. The Company
believes that income from operations and the proceeds from the Notes will be
sufficient to finance its business in the normal course. The Company may require
additional financing to pursue its growth through acquisitions and if such
financing is required, there are no assurances that financing will be available,
or if available, that it can be obtained on terms favorable to the Company, or
that such financing will not be dilutive to stockholders. The Company has a
commitment letter dated October 3, 1996 from Barnett Bank for making available
to the Company a revolving credit facility of up to $10,000,000 for working
capital purposes. It is currently contemplated that the loan facility will be
secured by the Company's and its subsidiaries' inventory and accounts receivable
and guaranteed by the Company's subsidiaries. See "Business."
Control By Certain Stockholders
Kanders Florida Holdings, Inc. ("KFH") owns in the aggregate 4,496,037
shares of the Company's Common Stock. Such shares are deemed to be beneficially
owned by Warren B. Kanders because he is the sole stockholder and sole director
of KFH. In addition, Mr. Kanders, who is the Chairman of the Board of Directors
of the Company, owns 29,141 shares individually. Such shares collectively
represent approximately 57.8% of the Company's outstanding shares of Common
Stock. KFH has the practical ability to control the election of all of the
members of the Company's Board of Directors and to otherwise exercise control
over the business, policies and affairs of the Company. The Company's
Certificate of Incorporation (the "Charter") does not provide for cumulative
voting rights with respect to the election of directors. The board members
appointed by KFH would have the ability to veto any proposed action, control any
matter presented at a special meeting and resolve any conflict of interest.
-8-
<PAGE>
Reliance Upon Key Personnel
The Company is substantially dependent upon the personal efforts and
abilities of Warren B. Kanders, Chairman of the Board of Directors, and Jonathan
M. Spiller, the President and Chief Executive Officer of the Company. Should
either of these two members of the Company's senior management be unable or
unwilling to continue in their present roles, or should such persons determine
to enter into competition with the Company, the Company's business could be
adversely affected. Because of the relatively small size of the Company, the
loss of a senior executive may have a materially adverse effect upon the Company
until a suitable replacement can be found.
Potential Antitakeover Effect of Certain Charter Provisions
The Company has 4,172,871 shares of authorized and unissued Common Stock
which could be issued to a third party selected by current management or used as
the basis for a stockholders' rights plan, which could have the effect of
deterring a potential acquiror. The ability of the Company's Board of Directors
to establish the terms and provisions of different series of preferred stock may
discourage unsolicited takeover bids from third parties.
Shares Eligible for Future Sale
Sales of substantial numbers of shares of Common Stock in the public
market in the future could adversely affect the market price of the Common Stock
and could impair the Company's ability to raise additional capital through the
sale of its equity securities. The Company intends to register under the
Securities Act 250,000 shares of its Common Stock, which it plans to offer to
the public to raise additional working capital. The 5,849,183 shares of Common
Stock owned by officers and directors as a group may be sold from time to time
subject to the restrictions contained in Rule 144 under the Securities Act or
pursuant to a separate registration statement. Ordinarily, under Rule 144, a
person having held restricted securities for a period of two years may, every
three months, sell in ordinary brokerage transactions or in transactions
directly with a market maker, an amount equal to the greater of 1% of the
Company's then outstanding Common Stock or the average weekly trading volume
during the four calendar weeks prior to such sale.
As part of the Company's acquisition strategy, the Company anticipates
issuing and registering under the Securities Act shares of its Common Stock.
Since the Company's acquisition strategy contemplates the issuance of shares of
Common Stock, the number of outstanding shares of Common Stock that are likely
to be eligible for sale in the future is likely to increase substantially. The
Company issued to Ivers-Lee 310,931 shares of Common Stock to pay for the NIK
Assets. The Company issued to DTCoA 270,728 shares of Common Stock, delivered
$1,000,000 in cash and assumed certain liabilities as payment for the DTCoA
Assets. In connection with the acquisition of the DTCoA Assets, the Company
entered into the Key Bank Letter Agreement (as hereinafter defined) pursuant to
which, among other things, it issued to Key Bank of Wyoming ("Key Bank") the Key
Bank Shares (as hereinafter defined) as consideration for the release by Key
Bank of its security interest in substantially all of the assets of DTCoA.
-9-
<PAGE>
In addition, as of October 8, 1996, 1,467,033 shares of Common Stock were
reserved for issuance upon the exercise of all stock options. Of this amount,
1,367,033 stock options were outstanding as of October 8, 1996. Of the
outstanding stock options, 814,533 shares were reserved for issuance upon the
exercise of options granted pursuant to the Company's 1994 Incentive Stock Plan
(the "1994 Incentive Stock Plan"). The shares issuable upon exercise of these
options have been registered under the Securities Act. In addition, 150,000
shares of Common Stock were reserved for issuance upon the exercise of options
granted pursuant to the Company's 1996 Stock Option Plan (the "1996 Plan"). The
shares issuable upon exercise of these options have not been registered under
the Securities Act. In addition, 402,500 shares of Common Stock were reserved
for issuance upon the exercise of non-qualified stock options issued to Richmont
Capital Partners I, L.P., the beneficial holder of 8.2% of the Company's Common
Stock ("Richmont"), and certain employees of the Company, including Jonathan M.
Spiller, the President and Chief Executive Officer of the Company. In addition,
39,886 shares of Common Stock are reserved for issuance upon conversion of the
Company's 3% Convertible, $1.00 stated value Preferred Stock (the "Old Preferred
Stock") by holders who have not yet submitted their shares of Old Preferred
Stock for conversion and 2,300,000 shares of Common Stock are reserved for
issuance upon conversion of the Notes. See "Risk Factors-5% Convertible
Subordinated Notes" and "Plan of Distribution."
Exercise of Outstanding Options May Have Dilutive Effect on Market
There are presently outstanding options to purchase up to 300,000 shares
of the Company's Common Stock, at a price of $7.50 per share, subject to
adjustment, for a term of up to 10 years, which are held by Richmont (the
"Richmont Options"). The Richmont Options provide an opportunity for Richmont to
profit from a rise in the market price of the Common Stock, with resulting
dilution in the ownership interest in the Company held by the then present
stockholders. Richmont would most likely exercise them and purchase the
underlying Common Stock at a time when the Company may be able to obtain capital
by a new offering of securities on terms more favorable than those provided by
the Richmont Options, in which event the terms on which the Company may be able
to obtain additional capital would be adversely affected. At the present time,
neither the Richmont Options nor the shares underlying the Richmont Options are
registered under the Securities Act, but the Company reserves the right to
register such shares at any time.
The Richmont Options and the underlying shares, whether vested or
unvested, are callable by the Company in the event that the closing price per
share of the Company's Common Stock is equal to or greater than $10 for a period
of 10 consecutive trading days after December 31, 1997, upon written notice to
Richmont given within 30 days of the conclusion of such 10 consecutive trading
days during which the closing price per share of the Company's Common Stock was
equal to or greater than $10. In such event, the Company may require Richmont to
exercise the Richmont Options in whole with respect to all such shares within 10
days of such notice to Richmont. In the event that Richmont does not exercise
the Richmont Options, the Richmont Options will lapse and be of no further force
or effect.
-10-
<PAGE>
Dividends
The Company has paid no cash dividends on its Common Stock in the last
three fiscal years and for the foreseeable future intends to retain any earnings
to finance the development and expansion of its business. The declaration of
dividends in the future will be at the election of the Board of Directors, and
will depend upon the earnings, capital requirements and financial position of
the Company, plans for expansion, general economic conditions and other
pertinent factors. Accordingly, there are no assurances that any dividends will
ever be paid on the Company's Common Stock.
Volatility of Market Price for Common Stock
The securities markets have experienced significant price and volume
fluctuations from time to time in recent years that have often been unrelated or
disproportionate to the operating performance of particular companies. These
broad fluctuations may adversely affect the market price of the Common Stock.
Substantial Shares Reserved for Issuance
The Company has an aggregate of 5,317,033 shares of Common Stock reserved
for issuance upon the exercise of options to purchase Common Stock and the
conversion of the Notes. These include: (i) 2,300,000 shares of Common Stock
issuable upon the conversion of the Notes; (ii) 300,000 shares issuable upon the
exercise of the Richmont Options; (iii) 814,533 shares issuable upon the
exercise of options granted under the 1994 Incentive Stock Plan; (iv) 102,500
shares issuable upon the exercise of non-qualified stock options issued to
certain employees of the Company; (v) 1,500,000 shares issuable upon the
exercise of options (150,000 options are outstanding to date, and 100,000 shares
are reserved for issuance pursuant to options to be granted in the future to
certain employees of the Company and its subsidiary, DTC) under the 1996 Plan;
and (vi) 300,000 shares issuable upon the exercise of options (225,000 options
are outstanding to date) under the Company's 1996 Non-Employee Directors Stock
Option Plan (the "1996 Directors Plan"). The conversion of the Notes and the
exercise of the options may dilute the net tangible book value of the Common
Stock. Further, the holders of the Notes and options, respectively, may be able
to convert and exercise the Notes and options, as the case may be, at a time
when the Company would otherwise be able to obtain additional equity capital on
terms more favorable to the Company.
FOR ALL OF THE FOREGOING REASONS AND OTHERS SET FORTH IN THIS PROSPECTUS, THE
SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THESE AND
OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THE SECURITIES SHOULD BE PURCHASED
ONLY BY PERSONS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT IN THE COMPANY.
-11-
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares covered by this Prospectus. All proceeds will be received by the Selling
Stockholders. See "Selling Stockholders."
SELLING STOCKHOLDERS
An aggregate of up to 4,560,217 Shares of Common Stock may be offered by
the Selling Shareholders. The Shares offered hereby constitute approximately 45%
of all shares of the Company's outstanding Common Stock, without giving effect
to the possible exercise of outstanding options, except as noted. The following
table sets forth certain information with respect to persons for whom the
Company is registering for resale to the public shares of the Company's Common
Stock. The table reflects such persons' beneficial ownership of the Common Stock
as of October 8, 1996, without giving effect to the sales of any shares under
the other registration statements. The Company will not receive any proceeds
from the sale of the Shares. There are no material relationships between any of
the Selling Stockholders and the Company or any of its predecessors or
affiliates, nor have any such material relationships existed within the past
three years, except as noted.
<TABLE>
<CAPTION>
==================================================================================================
Beneficial Ownership as of Maximum Beneficial Ownership
October 8, 1996 to be Sold After Offering if
Selling Stockholder in this Maximum
Offering is Sold (11)
(# of
Shares)
Amount Percent Amount Percent
(# of Shares) (# of
Shares)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Adrienne Partners, L.P. 10,000 * 10,000 0 --
- --------------------------------------------------------------------------------------------------
AmGuard Insurance 50,000 * 50,000 0 --
Company
- --------------------------------------------------------------------------------------------------
Banque Bruxelles Lambert 30,000 * 30,000 0 --
(Suisse) S.A.
- --------------------------------------------------------------------------------------------------
Wormser Freres 10,000 * 10,000 0 --
- --------------------------------------------------------------------------------------------------
Kurt W. Butenhoff 29,000 * 29,000 0 --
- --------------------------------------------------------------------------------------------------
Davos Partners, L.P. 67,000 * 67,000 0 --
- --------------------------------------------------------------------------------------------------
Matthew J. Diserio 10,000 * 10,000 0 --
- --------------------------------------------------------------------------------------------------
Burtt R. Ehrlich(1) 182,300 2.3% 150,000 22,300 *
- --------------------------------------------------------------------------------------------------
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================
Beneficial Ownership as of Maximum Beneficial Ownership
October 8, 1996 to be Sold After Offering if
Selling Stockholder in this Maximum
Offering is Sold (11)
(# of
Shares)
Amount Percent Amount Percent
(# of Shares) (# of
Shares)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Francine Ehrlich, cust.
f/b/o David B. Ehrlich 5,000 * 5,000 0 --
under the CT Uniform
Gift to Minors Act(2)
- --------------------------------------------------------------------------------------------------
Francine Ehrlich, cust.
f/b/o Julie B. Ehrlich
under the CT Uniform 5,000 * 5,000 0 --
Gift to Minors Act(2)
- --------------------------------------------------------------------------------------------------
Dasha A. Epstein 15,000 * 15,000 0 --
- --------------------------------------------------------------------------------------------------
First Mutual Fund, Inc. 100,000 1.3% 100,000 0 --
- --------------------------------------------------------------------------------------------------
Jonathan R. Foster 5,000 * 5,000 0 --
- --------------------------------------------------------------------------------------------------
Lawrence Flinn, Jr. 100,000 1.3% 100,000 0 --
- --------------------------------------------------------------------------------------------------
Gerbsman Family 7,000 * 7,000 0 --
Revocable Trust dated
12/4/90, Steven R.
Gerbsman and Marlene
Gerbsman, Trustees
- --------------------------------------------------------------------------------------------------
Jay N. Goldberg 50,000 * 50,000 0 --
- --------------------------------------------------------------------------------------------------
Gary W. Heldman 45,000 * 30,000 0 --
- --------------------------------------------------------------------------------------------------
Jeffrey Laikind IRA 5,000 * 5,000 0 --
- --------------------------------------------------------------------------------------------------
Jortaircy L.P. 40,000 * 40,000 0 --
- --------------------------------------------------------------------------------------------------
Kalb Voorhis & Co. 70,000 * 70,000 0 --
- --------------------------------------------------------------------------------------------------
Alan Kanders(3) 4,000 * 4,000 0 --
- --------------------------------------------------------------------------------------------------
Beatrice Kanders(4) 5,000 * 5,000 0 --
- --------------------------------------------------------------------------------------------------
Emily Kanders(4) 5,000 * 5,000 0 --
- --------------------------------------------------------------------------------------------------
Jeanne Kanders Revocable 30,000 * 30,000 0 --
Inter Vivos Trust(5)
- --------------------------------------------------------------------------------------------------
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================
Beneficial Ownership as of Maximum Beneficial Ownership
October 8, 1996 to be Sold After Offering if
Selling Stockholder in this Maximum
Offering is Sold (11)
(# of
Shares)
Amount Percent Amount Percent
(# of Shares) (# of
Shares)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ralph F. Kanders 20,000 * 20,000 0 --
Revocable Inter Vivos
Trust(5)
- --------------------------------------------------------------------------------------------------
Kanders Florida Holdings, 4,525,178 57.8% 1,980,217 2,544,961 20.5%
Inc.(3)(4)(5)(6)
- --------------------------------------------------------------------------------------------------
William P. Klingenstein 20,000 * 20,000 0 --
- --------------------------------------------------------------------------------------------------
Meespierson N.V. 200,000 2.5% 200,000 0 --
- --------------------------------------------------------------------------------------------------
Mercury Bank A.G. 100,000 1.3% 100,000 0 --
- --------------------------------------------------------------------------------------------------
MH Capital Partners L.P. 20,000 * 20,000 0 --
- --------------------------------------------------------------------------------------------------
Charles V. Moore 100,000 1.3% 100,000 0 --
- --------------------------------------------------------------------------------------------------
NorGuard Insurance 50,000 * 50,000 0 --
Company
- --------------------------------------------------------------------------------------------------
Wynnefield Partners Small 50,000 * 50,000 0 --
Cap Value L.P.
- --------------------------------------------------------------------------------------------------
Parsenn Partners Limited 23,000 * 23,000 0 --
- --------------------------------------------------------------------------------------------------
Prism Partners I 100,000 1.3% 100,000 0 --
- --------------------------------------------------------------------------------------------------
Rauch Investments 70,000 * 70,000 0 --
- --------------------------------------------------------------------------------------------------
Richmont Capital Partners 700,000 8.2% 600,000 100,000 1.9%
I, L.P.(7)
- --------------------------------------------------------------------------------------------------
Stanley H. Rumbough 20,000 * 20,000 0 --
- --------------------------------------------------------------------------------------------------
Stuart A. Shikiar 20,000 * 20,000 0 --
- --------------------------------------------------------------------------------------------------
Anastassia Sokolow(8) 5,000 * 5,000 0 --
- --------------------------------------------------------------------------------------------------
Dimitri Sokolow(8) 5,000 * 5,000 0 --
- --------------------------------------------------------------------------------------------------
Lydia Sokolow(8) 5,000 * 5,000 0 --
- --------------------------------------------------------------------------------------------------
Marie Sokolow(8) 5,000 * 5,000 0 --
- --------------------------------------------------------------------------------------------------
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================
Beneficial Ownership as of Maximum Beneficial Ownership
October 8, 1996 to be Sold After Offering if
Selling Stockholder in this Maximum
Offering is Sold (11)
(# of
Shares)
Amount Percent Amount Percent
(# of Shares) (# of
Shares)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
S.T. Investors Fund, 100,000 1.3% 100,000 0 --
LLC(9)
- --------------------------------------------------------------------------------------------------
Richard Sonking 10,000 * 10,000 0 --
- --------------------------------------------------------------------------------------------------
Spirit Fund, Ltd. 25,000 * 25,000 0 --
- --------------------------------------------------------------------------------------------------
Thomas W. Strauss(10) 40,000 * 40,000 0 --
- --------------------------------------------------------------------------------------------------
Trinity Fund, Ltd. 100,000 1.3% 100,000 0 --
==================================================================================================
</TABLE>
* Less than 1%.
(1) Burtt R. Ehrlich is a director of the Company. Of the 172,300
shares listed, 20,600 are held in trust for the benefit of his
children, of which Mr. Ehrlich's spouse is trustee, and 400
shares are owned by Mr. Ehrlich's spouse's individual
retirement account, of which Mr. Ehrlich disclaims beneficial
ownership. Also includes the 50,000 shares which are deemed to
be beneficially owned by Mr. Ehrlich upon conversion of the
Notes. Excludes 75,000 stock options granted to Mr. Ehrlich
under the terms of the 1996 Non-Employee Directors Stock
Option Plan (the "1996 Directors Plan"). Such options were
granted to Mr. Ehrlich upon his initial election to the Board
of Directors on January 18, 1996, at an exercise price of
$3.75 per share, the closing trading price of the Company's
Common Stock on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), on January 18, 1996.
Such options vest in three equal annual installments on
January 18, 1997, 1998 and 1999. Of the 172,300 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.
(2) David Ehrlich and Julie Ehrlich are the children of Burtt R.
Ehrlich. Each of David Ehrlich, Julie Ehrlich and Burtt R.
Ehrlich disclaims beneficial ownership of shares owned by the
other.
(3) Alan Kanders and Warren B. Kanders are brothers. Each
disclaims beneficial ownership in shares owned by the other
and Alan Kanders disclaims beneficial ownership of the shares
owned by Beatrice Kanders, Emily Kanders, the Jeanne Kanders
Revocable Inter Vivos Trust and the Ralph F. Kanders Revocable
Inter Vivos Trust.
-15-
<PAGE>
(4) Beatrice Kanders and Emily Kanders are sisters of Warren B.
Kanders. Each disclaims beneficial ownership in shares owned
by the other and Beatrice Kanders and Emily Kanders each
disclaim beneficial ownership of the shares owned by Alan
Kanders, the Jeanne Kanders Revocable Inter Vivos Trust and
the Ralph F. Kanders Revocable Inter Vivos Trust.
(5) Jeanne Kanders and Ralph F. Kanders are the parents of Warren
B. Kanders, and they disclaim beneficial ownership in shares
owned by Warren B. Kanders. Warren B. Kanders disclaims
beneficial ownership of the shares owned by the Jeanne Kanders
Revocable Inter Vivos Trust and the Ralph F. Kanders Inter
Vivos Trust.
(6) Warren B. Kanders, the sole stockholder and sole director of
Kanders Florida Holdings, Inc. ("KFH"), is the Chairman of the
Board of Directors of the Company. The shares listed are
deemed to be beneficially owned by Mr. Kanders because he is
the sole stockholder and sole director of KFH. The shares
listed include 29,141 shares owned by Mr. Kanders
individually.
(7) Richmont Capital Partners I, L.P. ("Richmont") is represented
on the Board of Directors of the Company by Richard C.
Bartlett. Mr. Bartlett is the Chairman of the Board of
Directors of The Richmont Group, the general partner of
Richmont. Represents the number of shares deemed to be
beneficially owned by Richmont upon conversion of $3,000,000
principal amount of Notes at a conversion rate of $5.00 per
share. Also includes 100,000 stock options granted to Richmont
which are fully vested but unexercised pursuant to the
Richmont Options. The Richmont Options entitle Richmont to
purchase up to 300,000 shares of Common Stock. Of the 300,000
options granted, 100,000 are fully vested but unexercised, and
100,000 become fully vested on each of May 15, 1997 and May
15, 1998. The Richmont Options expire after 5:00 P.M., Eastern
Time, on May 15, 2006.
(8) Anastassia Sokolow, Dimitri Sokolow, Lydia Sokolow and Marie
Sokolow are the children of Nicolas Sokolow, a director of the
Company. Mr. Sokolow and each of his children disclaim
beneficial ownership in shares owned by the other.
(9) Nicolas Sokolow, a director of the Company, is also a member
of S.T. Investors Fund, LLC ("STI"). The shares listed exclude
75,000 stock options granted to Mr. Sokolow under the terms of
the 1996 Directors Plan. Such options were granted to Mr.
Sokolow upon his initial election to the Board of Directors on
January 18, 1996, at an exercise price of $3.75 per share, the
closing trading price of the Company's Common Stock on NASDAQ
on January 18, 1996. Such options vest in three equal annual
installments on January 1, 1997, 1998 and 1999. The shares
listed 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, 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.
(10) Thomas W. Strauss is a director of the Company. The number of
shares listed are deemed to be beneficially owned by Mr.
Strauss upon conversion of the Notes. Excludes 75,000 stock
options granted to Mr. Strauss under the terms of the 1996
Directors Plan. Such options were granted to Mr. Strauss upon
his initial election to the Board of Directors on May 13,
1996, at an exercise price of $7.50 per share, the closing
trading price of the Company's Common Stock on the American
Stock Exchange on May 13, 1996. Such options vest in three
equal annual installments on May 13, 1997, 1998 and 1999.
-16-
<PAGE>
(11) Information contained in the table assumes that all securities
offered pursuant to this Prospectus will be sold.
NIK ACQUISITION
On July 15, 1996, the Company, through its subsidiary NIK, acquired
certain assets of NIK Public Safety from Ivers-Lee. NIK Public Safety is the
leading manufacturer and distributor of portable narcotic identification kits
used for the identification of narcotic substances by law enforcement agencies.
In addition, NIK Public Safety distributes the Flex-Cuf restraint, a patented
disposable restraint manufactured by Thomas & Betts, as well as specimen
collection kits, evidence collection kits and tamper guard evidence tape. The
Company and NIK (collectively, the "NIK Purchaser"), acquired from Ivers-Lee and
LFC No. 46 Corp., a wholly-owned subsidiary of Ivers-Lee (Ivers-Lee and LFC No.
46 Corp., collectively, the "NIK Seller"), certain assets of NIK Public Safety
from Ivers-Lee pursuant to an asset purchase agreement dated as of July 2, 1996
(the "NIK Asset Purchase Agreement"), pursuant to which: (i) the NIK Purchaser
agreed to purchase inventory, receivables, intellectual property, contracts and
other tangible and intangible properties and related assets of NIK Public Safety
from the NIK Seller (collectively, the "NIK Assets"); and (ii) in consideration
therefor, the NIK Purchaser agreed to issue to the NIK Seller 310,931 shares of
Common Stock of the Company, valued at $2,400,000 in accordance with the NIK
Asset Purchase Agreement (the "NIK Shares").
In connection with the execution of the NIK Asset Purchase Agreement, the
NIK Purchaser agreed to register the NIK Shares for sale under the Securities
Act. On the closing date, the NIK Purchaser advanced to the NIK Seller
$1,200,000 (the "Advance"). Such Advance will not bear interest and must be
repaid by the NIK Seller with the first $1,200,000 realized by the NIK Seller
from the sales of the NIK Shares. In the event that the sum of the aggregate net
proceeds from sales of the NIK Shares prior to December 31, 1996, less any
amounts paid to the Company on account of the Advance (the "NIK Seller's
Balance"), and the Advance are less than $2,400,000, the Company has agreed to
pay to the NIK Seller, on December 31, 1996, the difference between $2,400,000
and the sum of NIK Seller's Balance and the Advance. In the event that the sum
of the NIK Seller's Balance and the Advance at any time exceeds $2,400,000, then
the NIK Seller has agreed to pay to the NIK Purchaser, an amount equal to the
excess of such NIK Seller's Balance and the Advance over $2,400,000.
Pursuant to the provisions of the NIK Asset Purchase Agreement, Ivers-Lee
irrevocably delivered to Union Bank of Switzerland, New York Branch ("UBS") the
stock certificate of the Company issued in the name of Ivers-Lee representing
the NIK Shares to be held by UBS (the "UBS/Ivers-Lee Account"). UBS is
authorized to hold the NIK Shares in its possession and to effect any sales of
NIK Shares as the Company, pursuant to an Irrevocable Power of Attorney granted
by Ivers-Lee in favor of Jonathan M. Spiller, President and Chief Executive
Officer of the Company, may from time to time direct (the "Ivers-Lee Power of
Attorney"). Under the Ivers-Lee Power of Attorney, Mr. Spiller has the power to
effect, in the name of, for and on behalf of Ivers-Lee, any and all sales of the
NIK Shares.
-17-
<PAGE>
The terms of the UBS/Ivers-Lee Account are irrevocable, and pursuant to
the UBS/Ivers-Lee Account and the Ivers-Lee Power of Attorney, the Company has
the right to direct the sales of the NIK Shares; provided, however, that in the
event that Ivers-Lee has not received an aggregate of $2,400,000 (including the
NIK Seller's Balance and the Advance) on or before December 31, 1996, or in the
event that the NIK Purchaser is otherwise in default of its obligations to
Ivers-Lee pursuant to the NIK Asset Purchase Agreement, then the provisions of
the UBS/Ivers-Lee Account and the Ivers-Lee Power of Attorney will terminate,
and the NIK Shares will be delivered to Ivers-Lee. The UBS/Ivers-Lee Account and
the Ivers-Lee Power of Attorney will also terminate upon the sale of all of the
NIK Shares and the disposition of the proceeds therefrom.
The foregoing description of the NIK Asset Purchase Agreement and the
transactions contemplated thereby is not intended to be complete and is
qualified in its entirety by the complete text of the NIK Asset Purchase
Agreement, the letter agreement between UBS and Ivers-Lee and the Ivers-Lee
Power of Attorney.
DTCoA ACQUISITION
On September 30, 1996, the Company, through its subsidiary DTC, acquired
substantially all of the assets of DTCoA (such acquisition, the "DTCoA
Acquisition"). DTCoA is a leading manufacturer and distributor of
less-than-lethal and anti-riot products including pepper sprays, distraction
devices, flameless expulsion grenades, specialty impact munitions and dry
powdered oleoresin capsicum to law enforcement agencies and military services in
the United States and abroad. In addition, DTCoA distributes other similar
products including gas masks, riot helmets and gun holsters. The Company and DTC
(collectively, the "DTCoA Purchaser"), acquired from DTCoA, Robert Oliver, and
Sandra Oliver (DTCoA, Robert Oliver, and Sandra Oliver, collectively, the "DTCoA
Seller"), substantially all of the assets of DTCoA (the "DTCoA Assets") pursuant
to an asset purchase agreement dated as of August 23, 1996 (the "DTCoA Asset
Purchase Agreement"), pursuant to which: (i) the DTCoA Purchaser agreed to
purchase the DTCoA Assets from the DTCoA Seller; and (ii) in consideration
therefor, the DTCoA Purchaser (x) delivered $1,000,000 in cash to the DTCoA
Seller, (y) issued to the DTCoA Seller 270,728 shares of Common Stock of the
Company, valued at $2,000,000 in accordance with the DTCoA Asset Purchase
Agreement (the "DTCoA Shares"), and (z) assumed certain liabilities of DTCoA,
all as more fully set forth in the DTCoA Asset Purchase Agreement.
In connection with the execution of the DTCoA Asset Purchase Agreement,
the DTCoA Purchaser agreed to register the DTCoA Shares for sale under the
Securities Act of 1933, as amended, by December 15, 1997.
In order to secure the obligations of the DTCoA Seller under the DTCoA
Asset Purchase Agreement, the DTCoA Seller delivered to UBS, as escrow agent
(the "Escrow Agent") pursuant to an escrow agreement (the "Escrow Agreement"),
the DTCoA Shares, together with any additional shares as may be required by the
DTCoA Asset Purchase Agreement. One-half of the DTCoA Shares will be held in
escrow (the "Escrow Fund") until March 15, 1998, and the remainder will be held
in escrow until June 30, 1999 (each, a "Release
-18-
<PAGE>
Date"). The DTCoA Seller shall be entitled to vote the DTCoA Shares in the
Escrow Fund and to receive dividends thereon, when, as and if declared by the
Board of Directors of the Company.
In connection with the DTCoA Acquisition, the Company issued to Key Bank
of Wyoming ("Key Bank") the Key Bank Shares (as hereinafter defined) as
consideration for the release by Key Bank of its security interest in
substantially all of the assets of DTCoA. Key Bank held such security interest
pursuant to credit facilities previously made available to DTCoA in the amounts
of $3,000,000 (the "$3,000,000 Facility") and $1,000,000 (the "$1,000,000
Facility").
Subject to the terms and conditions of a letter agreement dated August 16,
1996 by and among the Company, Key Bank, DTCoA, Robert Oliver and Sandra Oliver
(the "Key Bank Letter Agreement"), the Company delivered to Key Bank on
September 30, 1996 (the "Closing"), as payment in full of the $3,000,000
Facility and in complete satisfaction and discharge thereof, a certificate
registered in the name of Key Bank for 358,714 shares of Common Stock of the
Company (the "Key Bank Shares"), valued at $2,650,000 (the "Amount Due") in
accordance with the Key Bank Letter Agreement. Any amounts paid to Key Bank on
account of the Amount Due, including the Initial Amount (as hereinafter
defined), will result in a reduction of the then outstanding balance of the
Amount Due by a like amount. Pursuant to the Key Bank Letter Agreement, Key Bank
agreed that upon the registration of the Key Bank Shares, the Key Bank Shares
would be sold, provided that the Company would control, in its sole discretion,
the timing, manner and amount of Key Bank Shares to be sold; and in connection
therewith, the Company agreed to ensure that (a) Key Bank realizes net proceeds
from such sales (the "Net Sale Proceeds"), which, together with any advances
from the Deposit Account and the Initial Amount (each as hereinafter defined)
will, in the aggregate, equal the Amount Due, on or before September 30, 1997;
(b) all sales are arranged through UBS in accordance with all applicable laws,
rules, and regulations; and (c) none of the events of default described in the
Key Bank Letter Agreement have occurred. So long as Key Bank is not in default
of its obligations under the Key Bank Letter Agreement, Key Bank will have all
voting and dividend rights with respect to the Key Bank Shares. The Company
agreed to indemnify Key Bank against any capital gains taxes that may be
incurred by Key Bank resulting from the sale of the Key Bank Shares.
On the Closing date, the Company advanced to Key Bank by wire transfer
$662,500 (the "Initial Amount"). Provided none of the events of default
described in the Key Bank Letter Agreement have occurred, the Company will
thereafter be entitled to receive, before any Net Sales Proceeds are paid to Key
Bank, an amount equal to the Initial Amount plus all advances from the Deposit
Account previously paid by the Company to Key Bank and not so recouped. Key Bank
has provided UBS with irrevocable written instructions to such effect. Upon the
occurrence of any of the events of default described in the Key Bank Letter
Agreement, the Company is entitled to receive any portion of the Initial Amount
or advances from the Deposit Account not previously recouped after Key Bank has
received any unpaid balance of the Amount Due.
Pursuant to the provisions of the Key Bank Letter Agreement, Key Bank
irrevocably delivered to UBS the stock certificate of the Company issued in the
name of Key
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<PAGE>
Bank representing the Key Bank Shares to be held by UBS (the "UBS/Key Bank
Account"). UBS is authorized to hold the Key Bank Shares in its possession and
to effect any sales of the Key Bank Shares as the Company, pursuant to an
Irrevocable Power of Attorney granted by Key Bank in favor of Jonathan M.
Spiller, the President and Chief Executive Officer of the Company, may from time
to time direct (the "Key Bank Power of Attorney"). Under the Key Bank Power of
Attorney, Mr. Spiller has the irrevocable power to effect, in the name of, for
and on behalf of Key Bank, all sales of the Key Bank Shares.
In order to secure the Company's obligations to Key Bank on the Closing
date, the Company deposited with Key Bank (the "Deposit Account"), $1,987,5000,
which will be invested by Key Bank in 30-day certificates of deposit of Key Bank
which will bear interest at a rate per annum equal to the highest rate made
available by Key Bank to its customers for similar deposits (the "CD Rate"), and
will be automatically renewable for successive 30-day periods, subject to the
provisions of the Key Bank Letter Agreement.
The Deposit Account will be held in the name of the Company and the
principal amount of the Deposit Account will be subject to a perfected security
interest and right of set-off in favor of Key Bank. Upon payment in full of the
Amount Due, Key Bank may retain any interest earned on the Deposit Account that
has not been previously paid to the Company and apply it against the Interest
Equivalent Amount (as hereinafter defined) owed by the Company and DTCoA to Key
Bank.
The Amount Due from time to time outstanding will accrue an effective
annual rate of interest equal to two thirds of the sum of the CD Rate plus 1%
(the "Interest Equivalent Amount"). Each of the Company and DTCoA agreed to pay
to Key Bank on the earlier of the Maturity Date or the date on which the Amount
Due has been paid in full one-half of the Interest Equivalent Amount.
The Company will pay to Key Bank the remaining balance of the Amount Due
in accordance with the following schedule, subject to adjustment:
Date: Payment Amount:
----- ---------------
December 15, 1996 $300,000
January 31, 1997 $300,000
April 30, 1997 $350,000
July 31, 1997 $350,000
provided, however, that the Company will have the right, at its option, to
prepay all or a portion of the Amount Due without penalty or premium at any time
prior to the Maturity Date. All Net Sales Proceeds received by Key Bank will be
applied as a prepayment against the next Payment Amount(s) due. The Company will
have the right to use funds in the Deposit Account to make the payments
described above.
Upon receipt by Key Bank of the Amount Due, plus the entire Interest
Equivalent Amount, whether from the Initial Amount, the Net Sales Proceeds, the
Deposit Account, or any combination thereof, UBS will be instructed to deliver
to the Company for cancellation any
-20-
<PAGE>
remaining Key Bank Shares held by UBS for Key Bank and any excess Net Sales
Proceeds up to $20,000.
The foregoing description of the DTCoA Asset Purchase Agreement and the
Key Bank Letter Agreement and the transactions contemplated thereby are not
intended to be complete and are qualified in their entirety by the complete text
of the DTCoA Asset Purchase Agreement, the Key Bank Letter Agreement, the
instruction letter from Key Bank to UBS and the Key Bank Power of Attorney.
-21-
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma income statements for the six month
period ended June 30, 1996 and for the year ended December 31, 1995 gives effect
to the DTCoA Acquisition on September 30, 1996 and the issuance of the Notes by
the Company on April 30, 1996 as if the DTCoA Acquisition and the Note offering
had occurred as of January 1, 1996 and January 1, 1995, respectively. The
following unaudited pro forma balance sheet as of June 30, 1996 gives effect to
the issuance of the Notes and the acquisition of the NIK Assets and the DTCoA
Assets as if such transactions had occurred on June 30, 1996.
These unaudited pro forma financial statements may not be indicative of
the results that actually would have occurred if the transactions referred to
above had been in effect on the dates indicated or the results that may be
obtained in the future.
PF-1
<PAGE>
Armor Holdings, Inc.
Unaudited Proforma Income Statements
for the six months ended June 30, 1996
<TABLE>
<CAPTION>
Acquisition Issuance of
Historical of DTCoA Convertible
Armor Hldgs assets (3) Debt (4) Proforma
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
NET SALES $6,862,849 $4,913,530 $11,776,379
COST AND EXPENSES:
Cost of sales $4,368,251 $2,463,432 $6,831,683
Selling, general and administrative expenses $1,976,488 $1,462,135 $85,000 $3,523,623
Interest expense, net $102,459 $29,010 $287,500 $418,969
($123,046) ($123,046)
----------- ---------- ------------ -----------
OPERATING INCOME $415,651 $958,953 ($249,455) $1,125,150
Amortization of intangibles $28,114 $33,167 $61,281
Amortization of reorganization value in excess of
amounts allocable to identifiable assets $25,495 $25,495
----------- ---------- ------------ -----------
INCOME BEFORE INCOME TAXES $362,042 $925,786 ($249,455) $1,038,373
INCOME TAXES (5) $147,000 $361,056 ($91,948) $416,108
----------- ---------- ------------ -----------
NET INCOME $215,042 $564,729 ($157,507) $622,265
=========== ========== ============ ===========
EARNINGS PER COMMON SHARE AND COMMON
EQUIVALENT SHARES $0.03 $0.08
WEIGHTED AVERAGE COMMON SHARES AND
COMMON EQUIVALENT SHARES (6) 7,679,536 7,950,264
</TABLE>
See Notes to Unaudited Proforma Income Statements
PF-2
<PAGE>
Armor Holdings, Inc.
Unaudited Proforma Income Statements
for the year ended December 31, 1995
<TABLE>
<CAPTION>
Acquisition Issuance of
Historical of DTCoA Convertible
Armor Hldgs assets (2) Debt (4) Proforma
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
NET SALES $11,741,367 $10,352,701 $22,094,068
COST AND EXPENSES:
Cost of sales $7,443,080 $5,705,885 $13,148,965
Selling, general and administrative expenses $3,421,093 $3,339,023 $170,000 $6,930,116
Interest expense, net $280,891 $77,429 $575,000 $933,320
($246,091) ($246,091)
------------ ----------- ------------ -----------
OPERATING INCOME $596,303 $1,230,364 ($498,909) $1,327,758
Amortization of intangibles $66,334 $66,334
NON-OPERATING INCOME $227,500 $227,500
------------ ----------- ------------ -----------
INCOME BEFORE INCOME TAXES $823,803 $1,164,030 ($498,909) $1,488,924
INCOME TAXES (5) $303,650 $453,972 ($183,896) $573,726
------------ ----------- ------------ -----------
NET INCOME $520,153 $710,058 ($682,805) $915,198
============ =========== ============ ===========
EARNINGS PER COMMON SHARE AND COMMON
EQUIVALENT SHARES $0.08 $0.14
WEIGHTED AVERAGE COMMON SHARES AND
COMMON EQUIVALENT SHARES (6) 6,369,672 6,640,400
</TABLE>
See Notes to Unaudited Proforma Income Statements.
PF-3
<PAGE>
Armor Holdings, Inc.
Unaudited Proforma Balance Sheet
As of June 30, 1996
<TABLE>
<CAPTION>
Acquisition Acquisition
Historical of NIK of DTCoA
Armor Hldgs assets (1) assets (2) Proforma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $9,004,168 ($1,200,000) ($2,047,399) $5,756,769
Accounts receivable $1,967,827 $300,000 $2,095,958 $4,363,785
Inventories $1,237,020 $500,000 $2,183,233 $3,920,253
Prepaid expenses and other current assets $804,096 $354,692 $1,158,788
----------- ----------- ----------- -----------
Total current assets $13,013,111 ($400,000) $2,586,484 $15,199,595
PROPERTY AND EQUIPMENT, net $466,746 $1,924,147 $2,390,893
REORGANIZATION VALUE IN EXCESS OF AMOUNTS
ALLOCABLE TO IDENTIFIABLE ASSETS, net $3,505,079 $3,505,079
PATENTS, TRADEMARKS, & OTHER INTANGIBLES $1,855,000 $1,658,364 $3,513,364
OTHER ASSETS $735,297 $735,297
----------- ----------- ----------- -----------
TOTAL ASSETS $17,720,233 $1,455,000 $6,168,995 $25,344,228
=========== =========== =========== ===========
</TABLE>
See Notes to Unaudited Proforma Income Statements
PF-4
<PAGE>
Armor Holdings, Inc.
Unaudited Proforma Balance Sheet
As of June 30, 1996
<TABLE>
<CAPTION>
Acquisition Acquisition
Historical of NIK of DTCoA
Armor Hldgs assets (1) assets (2) Proforma
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Liability for Acquisition of Assets $1,455,000 $1,987,500 $3,442,500
Short term borrowings and current portion of long-term debt $31,751 $499,119 $530,870
Accounts payable, accrued expenses & other current liabilities $947,631 $1,570,459 $2,518,090
----------- ----------- ---------- -----------
Total current liabilities $979,382 $1,455,000 $4,057,078 $6,491,460
5% CONVERTIBLE SUBORDINATED NOTES:
Due to directors and affiliates $3,450,000 $3,450,000
Due to others $8,050,000 $8,050,000
----------- -----------
Total 5% convertible subordinated notes $11,500,000 $11,500,000
OTHER LONG-TERM DEBT AND CAPITALIZED LEASE
OBLIGATION, less current portion $24,479 $111,917 $136,396
----------- ----------- ---------- -----------
Total liabilities $12,503,861 $1,455,000 $4,168,995 $18,127,856
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $1 stated value, 1,700,000 shares
authorized, 0 shares issued and outstanding $0 $0
Common stock, $.03 par value, 15,000,000 shares
authorized, 6,919,816 shares issued and outstanding $207,594 $8,122 $215,716
Additional paid-in capital $3,829,058 $1,991,878 $5,820,936
Retained earnings $1,179,720 $1,179,720
----------- ----------- ---------- -----------
Total stockholders' equity $5,216,372 $0 $2,000,000 $7,216,372
----------- ----------- ---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,720,233 $1,455,000 $6,168,995 $25,344,228
=========== =========== ========== ===========
</TABLE>
See Notes to Unaudited Proforma Financial Statements
PF-5
<PAGE>
ARMOR HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(1) Acquisition of NIK Assets
Effective July 1, 1996, the Company acquired certain assets
of the NIK Public Safety Product Line from Ivers-Lee
Corporation (the "NIK Assets"). The purchase price of the
acquisition was $2,400,000 in stock plus $255,000 in costs
related to the purchase. The Company acquired inventory,
receivables and certain intangibles. The total purchase price
was allocated to the NIK Assets based on relative fair market
values. Patents, trademarks, and other intangibles will be
amortized over their respective useful lives which range from
5-25 years. The Company advanced the seller $1,200,000 in
cash at the closing which will be reimbursed to the Company
if the Company is able to sell the stock, on behalf of the
sellers of the NIK Assets, in the open market. The company is
not reflecting the stock as outstanding until it is sold in
the open market.
(2) Acquisition of DTCoA Assets
On September 30, 1996, the Company acquired substantially all
of the assets of Defense Technology Corporation of America, a
Wyoming corporation (the "DTCoA Assets"). The purchase
consideration was $838,025 in cash, approximately 630,000
shares of common stock, and the assumption of approximately
$2,250,000 in liabilities, of which $550,000 was paid at
closing. The purchase price was allocated based on relative
fair market values. Patents, trademarks, and other
intangibles will be amortized over their respective useful
lives which range from 5-25 years. As part of the
acquisition, the Company agreed to pay off the seller's main
credit facility of $3,000,000 for a total price of $2,650,000
in cash and stock.
In addition to the seller accepting an international
distributorship agreement with the Company (the
"International Distributorship Agreement"), the Company's
agreement with the seller provides that the Company will pay
the seller an additional $1,000,000 in stock if the Company
attains certain international sales goals over the next three
years.
(3) Acquisition of DTCoA Assets
Income Statement information was prepared using DTCoA's
audited financial statements as of December 31, 1995 with the
following adjustments:
- Sales were reduced for the new pricing which has been reduced
pursuant to the International Distribution Agreement.
- Cost of sales were reduced in order to reclassify product
liability insurance to a selling expense.
- Selling, general, and administrative expenses were
reduced to eliminate the international office
located in Miami, Florida and certain expenses
incurred relating to the previous owner of DTCoA,
including an airplane. In addition, these expenses
were increased to reflect new guaranteed commission
and life insurance premium costs incurred by the
Company in connection with the International
Distribution Agreement.
- Interest expense was reduced to reflect only the
interest relating to debt that was not paid off at
the closing of the acquisition.
- Amortization of intangibles reflect the Company's
policy of amortizing all patents, trademarks and
other intangibles over a life of 5-25 years.
PF-6
<PAGE>
(4) Issuance of Convertible Debt
On April 30, 1996, the Company issued 5% Convertible
Subordinated Notes due April 30, 2001 (the "Notes") whereby
the Company received cash of $11,500,000. The cash was
reduced by paying down the Company's credit facility by
approximately $1,700,000, and paying debt-related costs of
$850,000. The Notes have an interest rate of 5% which equates
to an interest cost of $575,000 annually, or $143,750
quarterly. In addition, deferred debt issue costs are being
amortized over the term of the Notes, which is five years.
The pro formas also reflect the reduction of historical
interest expense of $246,091 and $141,622 for the year ended
December 31, 1995 and for the six months ended June 30, 1996,
respectively, relating to debt paid off from the proceeds of
the issuance of the convertible debt.
(5) Income Taxes
The pro forma tax expense reflects the historical effective
tax rates incurred by the Company for each respective period.
In addition, no significant permanent differences are
associated with either acquisition, thus the federal
statutory rate of 39% has been applied in the pro forma.
(6) Earnings Per Share Calculation
No earnings per share calculations for each of the
acquisitions were performed because (1) there is no equity
interest in the NIK acquisition until the stock is sold into
the market and (2) calculating earnings per share on the
DTCoA acquisition on a stand alone basis is misleading and
distorts the consolidated earnings per share.
PF-7
<PAGE>
BUSINESS
History
The Company's predecessor was incorporated in January 1969, under the laws
of the State of New York under the name American Body Armor & Equipment, Inc.
(the "New York Corporation"). In February 1983, the New York Corporation moved
its operation to Florida. Effective January 1, 1984, the New York Corporation
was merged with and into Armour of Fernandina Beach, Inc. ("Armour"), a Florida
corporation incorporated in October 1980, which prior to such merger (the
"Armour Merger") had been a separate but affiliated entity of the New York
Corporation. Pursuant to the Armour Merger, Armour remained as the surviving
entity and subsequently changed its name to American Body Armor & Equipment,
Inc. ("ABA"). On August 21, 1996 (the "Effective Time"), in order to effect a
change in domicile from Florida to Delaware (the "Reincorporation"), ABA was
merged with and into Armor Holdings, Inc., a Delaware corporation. Prior to the
Effective Time, Armor Holdings, Inc. had been a wholly-owned subsidiary
corporation of ABA organized for the purpose of effecting the Reincorporation.
At the Effective Time, Armor Holdings, Inc. (the "Company") became the surviving
entity of the merger pursuant to which the Reincorporation was completed. The
merged entity is governed by the Delaware General Corporation Law ("DGCL") and
the Charter and bylaws of the Company.
In May 1992, the Company filed for relief under Chapter 11 of the United
States Bankruptcy Code. The bankruptcy filing was the result of a general
decline in the Company's operations, which included significant operating losses
in 1989 and 1991, and the inability to collect a $1.5 million receivable related
to the shipment of vests to a Middle East customer in April 1991. The Company
emerged from Chapter 11 protection effective September 20, 1993, upon
confirmation by the Bankruptcy Court of the Company's Plan of Reorganization.
In January, 1996, the Company underwent a change in control in connection
with the purchase by KFH and certain 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
("Hexcel") as of January 18, 1996 (the "Purchase"). 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, who was elected Chairman of the Board of Directors, Burtt R.
Ehrlich and Nicolas Sokolow to the vacancies to be created by such resignations.
Mr. Kanders is the sole stockholder and sole director of KFH. Upon assuming
office, Messrs. Kanders, Ehrlich and Sokolow constituted a majority of the Board
of Directors. Subsequent to the acquisition of shares in the Company by KFH and
the
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<PAGE>
private placement of the Notes, Thomas W. Strauss and Richard C. Bartlett were
appointed to 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 Old 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., the parent
corporation of Clark Schwebel, 900,000 shares of the Company's Common Stock. In
addition, 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 Old Preferred Stock
to convert such shares to Common Stock at 110% of the aggregate stated value of
the Old 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 Charter. All shares of the Company's Old 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 Old
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 66.4% of the total outstanding shares of Common Stock
of the Company.
Subsequently, on July 15, 1996, the Company, through its subsidiary NIK,
acquired certain assets of NIK Public Safety from Ivers-Lee, and on September
30, 1996, the Company, through its subsidiary DTC, acquired substantially all of
the assets of DTCoA. Upon completion of these acquisitions, the Company
currently is engaged in three product areas: (i) body armor and related
products; (ii) portable narcotic identification kits, Flex-Cuf disposable
restraints, specimen and evidence collection kits and evidence tape; and (iii)
less-than-lethal and anti-riot products.
General
Since its founding, the Company has been engaged in the development,
manufacture and distribution of ballistic protective equipment. Such equipment
includes 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. Through its recent acquisitions, the Company is
also engaged in the packaging, mixing and distribution of
-23-
<PAGE>
portable narcotic identification kits, the distribution of Flex-Cuf disposable
restraints, specimen and evidence collection kits and evidence tape, and the
manufacture and distribution of less-than-lethal and anti-riot products
including defensive aerosol sprays, distraction devices, chemical agents,
flameless expulsion grenades, specialty impact munitions and other similar
products including the distribution of gas guns, gas masks, batons, shields,
riot helmets and gun holsters. The scope of these latter products involve a
less-than-lethal approach for crowd and riot control.
See "Risk Factors-Product Liability."
The Company's products are marketed to municipal, state, federal and
foreign law enforcement agencies, private security entities, United States and
foreign military and correctional services, and private individuals with
security needs.
Armor Products
Body Armor
The Company manufactures two basic types of body armor: (i) concealable
armor, which is generally intended to be worn beneath the user's clothing, and
(ii) tactical armor, which is worn externally and is designed to protect more
coverage area and defeat higher level ballistic threats incorporating ballistic
hard armor plates. Both types of armor are manufactured using multiple layers of
an aramid or polyethylene ballistic fabric, stitched for integrity, covered and
finally enclosed in an outer carrier. The Company's lines of ballistic
protective vests each provide varying degrees of protection and are certified
under federal guidelines established by the National Institute of Justice (the
"NIJ"). All of the Company's body armor products sold in the United States are
certified under the NIJ's Body Armor Standard 0101.03.
The Company's concealable vests are contoured to closely fit the user's
body shape. Most of the Company's concealable vests are sold with a shock plate,
which is an insert designed to improve the protection of vital organs against
sharp instrument attack and to provide enhanced blunt trauma protection. These
vests may be supplemented with additional armor plates made of metal, ceramic or
Comspec(TM), to withstand increased ballistic threat levels than the vest is
otherwise designed to deter.
The Company's tactical vests are designed to give maximum all around
protection and incorporate additional coverage around the neck, shoulders and
kidneys than that provided by the Company's concealable vests. A groin protector
is often supplied as an accessory. These vests usually contain pockets to
incorporate panels constructed from small high-alumina ceramic tiles or pressed
polycarbonate Comspec(TM), which provides additional protection against rifle
fire. The Company's tactical vests are offered in a variety of styles, including
tactical assault vests, tactical police jackets, floatation vests, high-coverage
armor and flak jackets, each of which is manufactured to protect against varying
degrees of ballistic threats.
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Sharp Instrument Penetration Armor
The Company manufactures knife resistant vests designed primarily for use
by personnel in correctional facilities and other law enforcement employees who
are exposed to threats from sharp instruments. These vests are constructed using
an aramid ballistic fiber and titanium foil and are available in both
concealable and tactical versions. In addition, these vests can be combined with
ballistic armor configurations to provide combined ballistic resistant and sharp
instrument penetration resistant protection.
Explosive Ordnance Disposal Equipment ("EOD")
The Company manufactures and distributes a wide range of EOD disposal and
handling equipment as well as distributing EOD detection equipment manufactured
by a third party. This equipment includes bomb disposal suits, which are
primarily constructed of an aramid ballistic fabric covered by a Nomex(R) brand
fire-retardant cover. These suits cover the user's entire body (except hands)
and include a fitted helmet that provides protection and communication
capabilities. Other EOD equipment manufactured by the Company includes bomb
protection blankets and letter bomb suppression pouches.
Hard Armor and Shields
The Company manufactures a variety of hard armor and ballistic shields,
which are manufactured using aramid ballistic fibers, polyethylene ballistic
material, ballistic steel, ceramic tiles, ballistic glass or a combination of
any one or more of these materials. These products include tactical face masks
and helmets, Comspec(TM) shields, barrier shields and blankets as well as
upgrade armor plates. Upgrade armor plates are designed to fit into pockets
available on most of the Company's tactical vests. When used in conjunction with
the ballistic vests, these plates provide additional ballistic protection
against increased ballistic threats, including assault rifle ballistic
protection.
Other Armor-Related Products
Other specialty products manufactured by the Company include armored press
vests, executive vests, raincoats and fireman turnout coats designed to provide
various levels of ballistic protection. The Company also designs and
manufactures specialty armor applications for vehicles and aircraft. Such
applications include the manufacture of customized armored cars. The Company
also custom manufactures patented, lightweight and removable, soft armor panels
for aircraft of any dimension or configuration. In addition, the Company designs
and manufactures armor used in stationary protection applications. Such armor
can be custom designed for each individual application or provided as a "kit"
that can be installed on-site anywhere in the world.
Less-than-Lethal Products
The Company manufactures four distinct categories of less-than-lethal and
anti-riot products. These categories are aerosol sprays, chemical agents,
specialty impact munitions, and distraction devices.
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Aerosol Sprays
The Company manufactures several sizes of aerosol sprays containing the
active ingredient oleoresin capsicum. The formulation used is patented and
carries the trademark name of First Defense(R). The products range from small
"key-ring" and hand-held units available for both civilian and law enforcement
use, to large volume canisters for crowd and riot control, which is not
available to the general public.
Chemical Agents
The Company manufactures chemical agents containing tear producing active
ingredients available for use only by authorized public safety agencies. These
agents consist of the traditional tear gases Orthochlorobenzalmalonontirle (CS)
and Chloroacetophenone (CN), as well as oleoresin capsicum. These products are
packaged in hand-held or launchable grenades, both pyrotechnic and
non-pyrotechnic, as well as 37 mm, 40 mm, and 12 gauge munitions. The munitions
include barricade rounds, blast dispersions, and pyrotechnic canisters. The
Company holds a patented design covering two of its non-pyrotechnic grenades.
Specialty Impact Munitions
The Company manufactures a wide range of munitions also referred to as
Kinetic Energy Rounds. These munitions can be fired from standard 12 gauge
shotguns, 37 mm gas guns, and 40 mm launchers. These products are used for
individual target acquisitions or multiple target acquisitions, as in riot and
crowd control situations. The products range from single projectiles such as
bean bags, rubber balls, wood batons, and rubber sabots, to products containing
multiple projectiles. The multiple projectile products include rounds containing
several rubber pellets or rubber balls, to foam and wood batons. All of these
munitions are designed to be used in a less-than-lethal approach, where it is
not necessary to use deadly force.
Distraction Devices
The Company manufactures a patented device that is used for dynamic
entries by specially trained forces where it is necessary to draw the attention
of individuals away from an entry area. This trademark product is referred to as
a Distraction Device(R), which emits a loud bang and brilliant flash of light.
Narcotic Identification Products
The Company packages, mixes and distributes portable narcotic
identification kits used for the identification of narcotic substances by law
enforcement agencies.
Other Products
The Company has the exclusive rights in the United States to distribute
Gallet(R) helmets, protective ballistic helmets used by law enforcement agencies
and military services. The Company also has the non-exclusive rights to
distribute Scanna(R) letter bomb and Madis(R) car bomb detectors and the
exclusive rights to distribute the Flex-Cuf restraint, a
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patented restraint manufactured by Thomas & Betts. The Company manufactures and
distributes other specialty products including: gas guns, gas pistols, gun
locks, specimen collection kits, evidence collection kits and tamper guard
evidence tape. In addition, the Company also distributes certain items
manufactured by others such as gas masks, batons and holsters.
Manufacturing
The Company manufactures substantially all of its bullet, bomb and
projectile resistant garments and other ballistic protection devices. The
Company also manufactures virtually all of its less-than-lethal products, other
than piece parts which are assembled and used in finished goods. In addition,
the Company packages, mixes and distributes its portable narcotic identification
kits.
The Company's manufacturing processes and techniques are in accordance
with guidelines established by various regulatory agencies, and the Company
believes it is currently in compliance with all applicable material
environmental regulations.
Research and Development
The Company continually develops new armor-related products to meet the
demands of the marketplace. Customer needs, including specific use requirements
and cost, drive the development process. The Company's product development
process involves combining state-of-the-art ballistic fibers, cover materials
and unique weaves with improved design and manufacturing processes to produce
competitively priced products which provide the maximum comfort at the lowest
possible weight, while meeting the customer's ballistic threat requirements.
During the fiscal year ended December 31, 1995, the Company had expenditures
related to new product development and testing of $444,118, as compared with
$263,596 during the fiscal year ended December 31, 1994.
The Company is also committed to research and development of
less-than-lethal products. The combination of end user feedback and tactical use
applications enhance the development process. The Company's research combines
current technology in evaluating its products as well as utilizing quality
manufacturing processes that underscore product safety and reliability. During
1995, DTCoA added over 15 newly developed items to its product line. In
addition, the Company is constantly looking for ways to improve its current
product lines as well as manufacturing techniques. Over the last two years,
DTCoA has invested over $350,000 in product development and testing.
Raw Materials, Sources and Availability
The primary raw materials used by the Company in manufacturing ballistic
resistant garments are aramid ballistic fibers and polyethylene ballistic
materials, including Kevlar(R), Twaron(R) and SpectraShield(R). The Company
purchases cloth woven out of aramid yarn from a number of independent weaving
companies. The Company has begun to use SpectraShield(R) as a new, alternative
ballistic-resistant fabric to reduce its dependence on Kevlar(R).
SpectraShield(R) has been used in combination with Kevlar(R) in approximately
20% of all vests sold by the Company. SpectraShield(R) is not, however expected
to become a complete
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substitute for Kevlar(R) in the near future due to the fabric's physical
characteristics. In the opinion of management, the Company enjoys a good
relationship with its suppliers and would not experience significant delays in
the delivery of its products if Kevlar(R) cloth or any other raw material from
any one of the mills the Company does business with were to become unavailable.
Kevlar(R), the Company's most important raw material, is not a scarce resource
and there are adequate supplies of Kevlar(R) to meet the Company's needs. If,
however, for any reason, the Company were unable to obtain Kevlar(R), the
Company would be required to utilize other fabrics, which although readily
available, may require the Company to modify the specifications of its products.
Until the Company selected an alternative fabric and such specifications were
modified, its operations could be severely curtailed and the Company's financial
condition and operations could be adversely affected.
The raw materials used in the production of chemical agents are supplied
by several sources. The raw chemicals used in the production of CS tear gas are
obtained readily with the exception of Malononitrile. It is the understanding of
the Company that this material is limited in sources, and until an alternate
source could be located, the production of CS tear gas could be severely
curtailed. The remainder of the chemicals and piece parts used by the Company
for chemical agents are readily available from other suppliers.
The Company purchases other raw materials used in the manufacture of its
various products from a variety of sources. The Company believes additional
sources of supply of these materials are readily available. The Company also
owns several molds which are used throughout the less-than-lethal product line.
Customers
The Company's products are sold nationally and internationally, primarily
to law enforcement agencies and military and correctional services. Sales to
domestic law enforcement agencies, including police departments, state
correctional facilities, highway patrols and sheriffs' departments, comprise the
largest portion of the Company's business. Sales to the United States federal
law enforcement and military branches, including federal correctional
facilities, also comprise a significant portion of the Company's business. Sales
to international customers are made primarily to military and law enforcement
agencies. International sales are primarily made on terms requiring the Company
to receive payment in advance of shipment or payment through a letter of credit
confirmed by a major United States bank. All sales are made under terms
requiring payment in United States currency. During 1995, the Company had no
sales to individual customers which exceeded 10% of total sales. See "Risk
Factors-Concentration of Business Activities; Reliance Upon Governmental
Spending-International Sales."
Marketing and Distribution
The Company's distribution network consists of independent domestic
distributors and independent international agents, who in turn resell the
products to the end user. In certain rare situations, the Company sells directly
to end users. The Company has many independent domestic distributor locations as
well as many independent international agent representatives.
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The Company employs regional sales managers who are responsible for
marketing the Company's products to domestic distributors and law enforcement
agencies in the United States. These regional sales managers are responsible for
calling upon the individuals within the distributor organization or agency who
are responsible for making purchasing decisions in order to provide product
demonstrations and information, including specifications, concerning the
Company's products. These regional sales managers employed by the Company are
compensated on a salary plus commission basis with commission amounts subject to
review based upon the profitability of the contract. The Company also employs
the services of agents in various other countries to support international
sales.
The Company's primary marketing emphasis is on the development of
relationships with key distributors and agents in order to improve the quality
of the distribution network. In conjunction with this effort, the Company may
work on joint marketing efforts with distributors for special promotions and
direct mailings. The Company's national advertising is generally targeted toward
increased name recognition and new product introduction, primarily for domestic
law enforcement agencies. This form of advertising consists of advertisements in
law enforcement trade magazines and attendance at trade shows. During the fiscal
years ended December 31, 1995 and 1994, advertising and marketing expenditures
were approximately $240,000 and $200,000, respectively.
The Company has a comprehensive Training Division to support the necessary
education of its customer base in the proper use of its various product lines.
The Company also contractually employs police officers for technical support and
as instructors.
The Company is involved with and supports several significant law
enforcement associations, including the National Tactical Officer's Association,
the International Law Enforcement Firearms Instructors, the American Society of
Law Enforcement Trainers, and the International Association of Chiefs of Police.
Backlog
The Company's backlog of orders consists of orders received but not yet
manufactured. In the case of orders from new customers or international
customers, such backlog includes only orders where management believes an
acceptable assurance of payment has been received. Such assurance is normally in
the form of a substantial prepayment prior to placing the order into production
along with payment of the remaining balance prior to shipment, or a confirmed
letter of credit or other acceptable form of bank guarantee of payment.
As of December 31, 1995, the Company had an estimated backlog of
$3,058,000, as compared to $1,205,000 as of December 31, 1994. As of September
30, 1996, the Company had an estimated backlog of $2,126,227. Management
believes that a backlog of approximately four weeks production provides for
reasonable production scheduling. The Company may reduce or increase
production in the future as a result of changes in the level or mix of backlog.
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Government and Industry Regulations and Standards
The bullet, sharp instrument penetration and bomb resistant garments and
accessories manufactured and sold by the Company are not currently subject to
government regulations. However, law enforcement agencies and the military
publish invitations for bidding which specify certain standards of performance
which bidders' products must meet. The NIJ, under the auspices of the United
States Department of Justice, has issued a voluntary ballistic standard (NIJ
0101.03) for bullet resistant vests. The Company regularly submits its vests to
independent laboratories for ballistic testing under this voluntary ballistic
standard. See "Risk Factors-Product Liability."
The Company's products utilize different "applications" or combinations of
material to produce equipment which provides protection against fragments or
gunshots fired from a variety of firearms at each "Threat Level," as defined by
the NIJ's Standard 0101.03 ("Threat Levels"). The NIJ conducts a series of tests
designed to verify that armor used by domestic law enforcement officers meets a
designated standard of protection.
Threat Levels are defined in recognition of the trade-off between
protection and wearability. The weight and bulk of body armor are generally
proportioned to the protection it provides. The Threat Level protection that a
police officer will desire in a vest is determined by the types of threats he
will face on the streets, including the officer's own weapon, should it be used
against the officer. As criminals continue to use heavier weapons, officers will
require protection at a higher Threat Level. The Company believes that police
department or other purchasers will seek vests that provide an adequate level of
protection without being so heavy and uncomfortable that the user is discouraged
from wearing it.
The Company's management believes that it has created a competitive
advantage in "wearability." Wearability tests conducted by the Company have
convinced management that the Company's vests are more comfortable to wear, fit
better and can be worn for longer periods of time than similar products from
competitors. Management believes that the Company's products offer higher
protection at lower weight and bulk. The Company also offers designs that
provide greater vital-area coverage than other equipment on the market. The
Company custom manufactures each vest to specific measurements of individual
wearers. At least seven different body measurements are taken, after which the
basic design is then further modified by weight, height and sex of the
prospective wearer.
The less-than-lethal product area of the Company operates and manufactures
subject to the regulation of several regulatory agencies. Within the State of
Wyoming, the Company operates under the guidelines of the Wyoming Department of
Employment Workers' Safety and Compensation Division. The Company has enrolled
in an Employer Voluntary Technical Assistance Program (EVTAP), which monitors
the manufacturing processes to ensure that the Company is free of any adverse
work conditions. Currently, the Company is in good standing within the EVTAP
program. Also within the State of Wyoming, the Company adheres to the guidelines
for emissions as regulated by the Wyoming Department of Environmental Quality.
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The less-than-lethal product area of the Company is also regulated by the
Bureau of Alcohol, Tobacco, and Firearms because the Company manufactures
Destructive Devices and because it uses ethyl alcohol in the formulation of
First Defense(R). The Company also ships hazardous goods, and in doing so, is
subject to the regulations of the Department of Transportation for packaging and
labeling.
Patent Protection and Proprietary Information
The Company relies on trade secrets, proprietary know-how and continuing
technological innovation (collectively, "Proprietary Information") to develop
and maintain its competitive position. There can be no assurance that the
Company's reliance on its Proprietary Information will protect the Company from
competing technology or that, insofar as it relies on trade secrets and
unpatented know-how, others will not independently develop similar technology or
secrecy will not be breached. See "Risk Factors-Patent Protection and
Proprietary Information."
Competition
The Company's business across its product lines is highly competitive. In
the United States law enforcement, government, military and correctional
markets, the Company has several competitors. The Company believes that the
principal elements of competition are price and quality. The Company believes
that its products are priced competitively and that the quality of its products
is competitive with products manufactured by other companies having similar
capabilities. In the international market, the Company's competition consists
primarily of its larger American competitors as well as certain international
companies and, depending upon the market, smaller local manufacturers. In
certain international markets, the Company's ability to be competitive is
adversely affected by import duties imposed on its products. See "Risk
Factors-Competition/Technical Obsolescence."
Employees
As of September 30, 1996, the Company had approximately 188 employees,
approximately 6 of whom were executive officers of the Company. Of the remaining
employees, approximately 9 were office personnel, approximately 150 were
employed in manufacturing, quality assurance, research and development,
purchasing, shipping and warehousing and approximately 20 were sales personnel.
As of December 31, 1995, the total number of employees of the Company was
approximately 131. The increase of employees was due primarily to the
acquisition of NIK Public Safety and DTCoA.
Possible Future Acquisitions and Investments
The Company intends to diversify and expand its business operations
through the possible acquisition of one or more operating companies, which may
or may not be related to its current businesses, and is actively seeking to
acquire additional operating companies or interests therein. In furtherance of
this strategy, the Company may consider a public offering of its shares or an
acquisition or merger with a company that has a public trading market for its
securities. Other than the NIK Acquisition and the DTCoA Acquisition, the
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Company has no specific plans, arrangements, understandings or commitments with
respect to any such acquisition at the present time, and it is uncertain as to
when or if any acquisition will be made. See "Risk Factors-Rapid Growth Through
Acquisitions."
Liquidity and Capital Resources
The Company's principal sources of working capital during the fiscal year
ended December 31, 1995 were bank borrowings from LaSalle and trade credit. As
of May 1, 1996, the Company reduced its credit facility with LaSalle to a zero
balance. Effective June 30, 1996, the financing agreement with LaSalle expired
and was not renewed. The Company has a commitment letter dated October 3, 1996
from Barnett Bank for making available to the Company a revolving credit
facility of up to $10,000,000 for working capital purposes. It is currently
contemplated that the loan facility will be secured by the Company's and its
subsidiaries' inventory and accounts receivable and guaranteed by the Company's
subsidiaries.
On April 30, 1996, the Company completed a private placement of the Notes
pursuant to which $11,500,000 aggregate principal amount of Notes were sold by
the Company under the Convertible Subordinated Note Purchase Agreement. The
following description of the Note offering, the Convertible Subordinated Note
Purchase Agreement and the Notes is not intended to be complete and is qualified
in its entirety by the complete texts of the form of Convertible Subordinated
Note Purchase Agreement and the form of Note.
The Notes bear interest at 5% per annum, mature on April 30, 2001, and are
subordinated to all existing and future Senior Indebtedness of the Company, as
defined and as more fully set forth in the Convertible Subordinated Note
Purchase Agreement. In addition, the Notes may be convertible into shares of
Common Stock of the Company at the option of the holder thereof at any time
prior to the maturity date at a conversion price of $5.00 per share, subject to
adjustment as set forth in the Convertible Subordinated Note Purchase Agreement.
The Shares being registered hereunder include the shares underlying the Notes.
The Company may redeem the Notes at par at any time two years after
issuance, or at any time after their issuance if the closing price of the Common
Stock exceeds $7.50 per share for 10 consecutive trading days and the shares of
Common Stock underlying the Notes have been registered under the Securities Act.
In the event the Company elects to redeem the Notes, the Holders of the Notes
will have the option to convert the Notes into shares of the Company's Common
Stock at a conversion price of $5.00 per share prior to such redemption, subject
to adjustment as set forth in the Convertible Subordinated Note Purchase
Agreement.
Personal Liability and Indemnification of Directors and Officers
The Company's Charter includes provisions that limit the liability of the
Company's directors. The Delaware General Corporation (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 stockholders 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 stockholders; (ii) for acts or omissions not
in good faith or which
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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 Company's Charter 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.
The Company has obtained directors' and officers' insurance for the
Company's directors and officers. In cases of large damage awards and
nonexistent or inadequate insurance, the indemnification provisions contained in
the Company's Charter may require the Company to make payments to its officers
and directors sufficiently large to impair the Company's financial condition or
a stockholder's investment and/or reduce stockholder's equity.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
PROPERTIES
The Company occupies a 50,000 square foot office, sales, manufacturing and
warehouse facility in Nassau County, Florida (the "Yulee Facility"). The Yulee
Facility has been utilized as the Company's primary manufacturing facility and
headquarters since 1987. As a result of a sale leaseback transaction, the
Company has leased this facility since July 1989. The Company's current lease is
for a six year term ending April 30, 1999, at an annual base rental of $110,000
(plus annual inflationary escalations). The lease provides the Company with
options to extend the lease for two additional five year terms at prevailing
market rental rates; however, to the extent the Company makes certain
improvements to the facility, the Company may elect to extend the lease at the
present rental rate. In addition, the lease requires the Company to pay all
utilities and maintenance expenses incurred in connection with the premises, as
well as all real estate taxes, insurance, water and sewer charges. The Company
believes that it has adequate insurance coverage for this property and its
contents.
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The Company presently intends to relocate its operations to the
Jacksonville, International Tradeport, located in Jacksonville, Florida, on or
about April 1997. The Company plans to build a 70,000 square foot facility, with
the ability to expand to 142,000 square feet. The new facility will be utilized
as the Company's primary manufacturing and distribution center, as well as its
corporate headquarters. The Company plans to sublease the Yulee Facility until
the expiration of the current lease on April 30, 1999.
To help defray the approximately $3,500,000 cost of construction and the
purchase of new equipment, the City of Jacksonville is negotiating a $651,350
federal loan for the Company. Under such loan, the incremental tax revenues
generated by the project will be used to repay the loan. The loan requires the
approval of the Jacksonville International Airport Community Redevelopment
Authority and the Jacksonville City Council. To qualify for the loan, the
Company has pledged that 51% of the new jobs generated over a specified period
of time will be held by low- to moderate-income employees.
The Company's less-than-lethal operations currently occupy four locations
in Casper, Wyoming consisting of over 60 acres and seven buildings with a
combined square footage of 61,686. The Company has 5 buildings with 29,811
square feet of manufacturing and 25,200 square feet of storage/warehousing
within 2 buildings. The remaining 6,675 square feet is office space. Of these
four properties, two are owned by the Company. The third property occupied by
the Company is encumbered by a $144,000 mortgage carrying interest at a rate of
9% on the outstanding principal amount. The Company is required to make
repayments of principal and interest amortized over a period of 20 years, with a
balloon payment due on May 1, 1997, at which time the balance of the unpaid
principal and interest are due in full. As of October 8, 1996, principal in the
amount of $130,000 remained to be paid on the mortgage. The fourth property
occupied by the Company consists of two buildings, of which one is owned by and
the other leased by the Company. The real property upon which these two
buildings are situated is also leased. The leased building and the real property
carry an annual rental of $26,400. The Company holds an option to purchase the
leased building and real property at this location at an exercise price of
$350,000. The option must be exercised on or before December 31, 1996. The
Company believes that it has adequate insurance coverage for all of its Wyoming
properties.
PLAN OF DISTRIBUTION
The sale of the Shares by the Selling Stockholders may be effected from
time to time in transactions (which may include block transactions by or for the
account of the Selling Stockholders) on the American Stock Exchange or on such
other market as the Company's Common Stock may then be trading, in negotiated
transactions, a combination of such methods of sale, or otherwise. Sales may be
made at fixed prices which may be changed, at market prices prevailing at the
time of sale, or at negotiated prices.
Selling Stockholders may effect such transactions by selling their Shares
of Common Stock directly to purchasers, through broker-dealers acting as agents
for the Selling Stockholders, or to broker-dealers who may purchase shares as
principals and thereafter sell the Shares from time to time on the American
Stock Exchange or on such other market as the Company's Common Stock may then be
trading, in negotiated transactions, or otherwise. Such
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broker-dealers, if any, may receive compensation in the form of discounts,
concessions, or commissions from the Selling Stockholders and/or the purchasers
for whom such broker-dealers may act as agents or to whom they may sell as
principals, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions).
The Selling Stockholders and broker-dealers, if any, acting in connection
with such sale might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act and any commission received by them and any
profit on the resale of the securities might be deemed to be underwriting
discounts and commissions under the Securities Act.
The Selling Stockholders, other than KFH, David Ehrlich, Julie Ehrlich,
S.T. Investors Fund, LLC, Anastassia Sokolow, Dimitri Sokolow, Lydia Sokolow and
Marie Sokolow, entered into the Convertible Subordinated Note Purchase Agreement
with the Company, which provides for the registration of the shares of Common
Stock under the Securities Act and the blue sky laws of the several states.
Pursuant to the Convertible Subordinated Note Purchase Agreement, the Company is
required to bear the cost of such registration and indemnify, among others, the
Selling Stockholders against certain liabilities, including those under the
Securities Act. Insofar as indemnification for liabilities under the Securities
Act may be permitted pursuant to the above-described agreements or otherwise to
directors, officers and controlling persons of the Company, the Company has been
advised that, in the opinion of the SEC, such indemnification is against public
policy expressed in the Securities Act and is therefore unenforceable.
LEGAL MATTERS
The validity of the securities offered hereby has been passed upon for the
Company by Kane Kessler, P.C., 1350 Avenue of the Americas, New York, New York
10019.
EXPERTS
The financial statements incorporated in this prospectus by reference from
the Company's Annual Report on Form 10-KSB for the year ended December 31, 1995
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
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<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"SEC") Washington, D.C., its Registration Statement No. 333-8533 under the
Securities Act of 1933, as amended, with respect to the shares of Common Stock
offered hereby. This Prospectus does not contain all of the information set
forth in such Registration Statement and the exhibits thereto. For further
information with respect to the Company and the Shares offered hereby, reference
is made to such Registration Statement and exhibits, which may be obtained from
the SEC at its principal office in Washington, D.C., upon payment of charges
prescribed by the SEC. Statements contained in this Prospectus as to the
contents of any contract or other documents referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified all respects by such reference.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Item Amount
---- ------
Securities and Exchange Commission Filing Fee..... $10,956.45
Blue Sky fees and expenses........................ $ 1,500.00
Printing and engraving costs...................... $ 1,000.00
Legal fees and expenses........................... $50,000.00
Accounting fees and expenses...................... $20,000.00
Transfer agent and registrar's fees............... $ 2,500.00
Miscellaneous..................................... $ 1,000.00
TOTAL....................................... $86,956.45
Item 15. Indemnification of Directors and Officers.
The Company's Charter includes provisions that limit the liability of the
Company's directors. 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 stockholders 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 stockholders;
(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
Company's Charter 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.
The Company has obtained directors' and officers' insurance for the
Company's directors and officers. In cases of large damage awards and
nonexistent or inadequate insurance, the indemnification provisions contained in
the Company's Charter may require the Company
II-1
<PAGE>
to make payments to its officers and directors sufficiently large to impair the
Company's financial condition or a stockholder's investment and/or reduce
stockholder's equity.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
Item 16. Exhibits.
The following table lists all exhibits to the Registration Statement as
amended hereby. Substantially all such exhibits are incorporated herein by
reference to registration statements, reports, and amendments thereof previously
filed by the Company, as more fully set forth below. Documents filed herewith,
if any, are marked with an asterisk (*). Documents incorporated by reference are
marked with two asterisks (**). Documents previously filed in connection with
this Registration Statement, if any, are marked with three asterisks (***).
Exhibit
No. Description
- ------- -----------
2.1** Order confirming Debtor's Third Amended and Restated Plan of
Reorganization with the Third Amended and Restated Plan of
Reorganization attached thereto (filed as Exhibit 2 to Form 8-K,
Current Report of the Company, dated October 1, 1993 and
incorporated herein by reference).
2.2** Agreement and Plan of Merger, dated July 23, 1996, by and between
ABA and the Company (filed as Exhibit 2.1 to Form 8-K, Current
Report of the Company, dated September 3, 1996 and incorporated
herein by reference).
2.3** Asset Purchase Agreement, dated as of July 2, 1996, by and among the
Company, NIK Public Safety, Ivers-Lee and LFC No. 46 Corp. (filed as
Exhibit 2.1 to Form 8-K, Current Report of the Company, dated July
30, 1996 and incorporated herein by reference).
II-2
<PAGE>
2.4** Asset Purchase Agreement, dated as of August 23, 1996, by and among
the Company, DTC, Robert Oliver, Sandra Oliver and DTCoA (filed as
Exhibit 2.1 to Form 8-K, Current Report of the Company, dated
October 9, 1996 and incorporated herein by reference).
3.1** Certificate of Incorporation of the Company (filed as Exhibit 3.1 to
Form 8-K, Current Report of the Company, dated September 3, 1996 and
incorporated herein by reference).
3.2** Certificate of Merger of ABA and the Company (filed as Exhibit 3.2
to Form 8-K, Current Report of the Company, dated September 3, 1996
and incorporated herein by reference).
3.3** Bylaws of the Company (filed as Exhibit 3.3 to Form 8-K, Current
Report of the Company, dated September 3, 1996 and incorporated
herein by reference).
5.1* Opinion of Kane Kessler, P.C., including consent.
23.1* Consent of Kane Kessler, P.C. (included in Exhibit 5.1).
23.2* Consent of Deloitte & Touche LLP.
24.1*** Power of Attorney.
* Filed herewith.
** Incorporated herein by reference.
*** Previously filed.
Item 17. Undertakings
The Company hereby undertakes as follows:
1. The Company shall file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(a) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) Reflect in the prospectus any facts or events which individually
or together, represent fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
the volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of the Registration Fee"
table in the effective registration statement; and
II-3
<PAGE>
(c) Include any additional or changed material information on the
plan of distribution.
2. The Company shall, for determining liability under the Securities Act,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
3. The Company shall file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
4. (a) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
(b) In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has fully caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Yulee, State of Florida on the 11th day of October, 1996.
ARMOR HOLDINGS, INC.
By:/s/ Jonathan M. Spiller
----------------------------------------------
Jonathan M. Spiller
President and Chief Executive Officer
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board of Directors October 11, 1996
- -------------------------
Warren B. Kanders
/s/Jonathan M. Spiller President, Chief Executive Officer October 11, 1996
- ------------------------- and Director
Jonathan M. Spiller (Principal Executive Officer)
* Vice President, Finance and October 11, 1996
- ------------------------- Secretary
Carol T. Burke (Principal Accounting Officer)
* Director October 11, 1996
- -------------------------
Burtt R. Ehrlich
* Director October 11, 1996
- -------------------------
Nicolas Sokolow
* Director October 11, 1996
- -------------------------
Thomas W. Strauss
* Director October 11, 1996
- -------------------------
Richard C. Bartlett
*By:/s/ Jonathan M. Spiller October 11, 1996
-----------------------------
Jonathan M. Spiller
As attorney-in-fact for each
of the persons indicated
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<PAGE>
EXHIBIT INDEX
The following Exhibits are filed herewith:
Exhibit No. Description Page
----------- ----------- ----
5.1 Opinion of Kane Kessler, P.C., including
consent.
23.1 Consent of Kane Kessler, P.C. (included in
Exhibit 5.1).
23.2 Consent of Deloitte & Touche LLP.
<PAGE>
EXHIBIT 5.1
<PAGE>
KANE KESSLER, P.C.
1350 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-4896
(212) 541-6222
FAX (212) 245-3009
October 11, 1996
Armor Holdings, Inc.
191 Nassau Place Road
Yulee, Florida 32097
Gentlemen:
We have acted as counsel for Armor Holdings, Inc. a Delaware
corporation (the "Company") in connection with the Registration Statement on
Form S-3 (No. 333-8533), as amended (the "Registration Statement"), under the
Securities Act of 1933, as amended (the "Act") filed by the Company with the
Securities and Exchange Commission. The Registration Statement relates to the
offer and sale of up to 4,560,217 shares of Common Stock, par value $.01 per
share (the "Common Stock"), of the Company, proposed to be sold by certain
selling stockholders, including holders (the "Noteholders") of the Company's 5%
Convertible Subordinated Notes due April 30, 2001 ("the Notes").
We have examined copies of the Certificate of Incorporation, as
amended, and Bylaws of the Company, the Registration Statement, records of
certain of the Company's corporate proceedings as reflected in the Company's
minute books and other records and documents that we have deemed necessary for
purposes of this opinion. We have also examined such other documents, papers,
authorities and statutes as we have deemed necessary to form the basis of the
opinion hereinafter set forth.
<PAGE>
Armor Holdings, Inc.
October 11, 1996
Page 2.
In our examination, we have assumed the genuineness of all
signatures and the conformity to original documents of all copies submitted to
us. As to various questions of fact material to our opinion, we have relied on
statements and certificates of officers and representatives of the Company and
public officials.
Based upon the foregoing and the statements contained herein, it is
our opinion that (i) when the Notes are duly converted into
shares of Common Stock, issued and paid for pursuant to, and in the manner
contemplated by, the Convertible Subordinated Note Purchase Agreement by and
among the Company and the Noteholders dated April 30, 1996 (assuming payment of
due consideration therefor), the Common Stock proposed to be sold by the selling
stockholders (who were formerly Noteholders) in the manner contemplated by the
Prospectus included as part of the Registration Statement will be validly
issued, fully paid and non-assessable, and (ii) the Common Stock proposed to be
sold by selling stockholders who are not Noteholders in accordance with the
terms of the Prospectus included as part of the Registration Statement have been
validly issued and are fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the Prospectus which forms a part thereof. In giving this consent,
we do not admit that we are in the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
We are qualified to practice law in the State of New York and do not
purport to be experts on, or to express any opinion herein concerning any law,
other than the laws of the State of New York and the General Corporation Law of
the State of Delaware.
Very truly yours,
KANE KESSLER, P.C.
By: /s/ Robert L. Lawrence
----------------------
<PAGE>
EXHIBIT 23.1
<PAGE>
CONSENT OF KANE KESSLER, P.C.
INCLUDED IN EXHIBIT 5.1
<PAGE>
EXHIBIT 23.2
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-8533 of Armor Holdings, Inc. on Form S-3 of our
report dated February 23, 1996, appearing in the Annual Report on Form 10-KSB of
American Body Armor & Equipment, Inc. for the year ended December 31, 1995 and
to the reference to us under the heading "Experts" in the Prospectus, which is a
part of this Registration Statement.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
October 8, 1996
