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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 26, 1997
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Armor Holdings, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-18863 59-3392443
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State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
13386 International Parkway, Jacksonville, Florida 32218
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (904) 741-5402
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191 Nassau Place Road, Yulee, Florida 32097
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
SUPERCRAFT (GARMENTS) LIMITED
On April 7, 1997, Armor Holdings, Inc., a Delaware
corporation (the "Company"), through its newly formed wholly-owned subsidiary
Armor Holdings Limited, a United Kingdom corporation ("AHL"), acquired all of
the outstanding share capital (the "Supercraft Shares") of Supercraft
(Garments) Limited, a United Kingdom corporation ("Supercraft") pursuant to
the terms of a Share Acquisition Agreement (the "Supercraft Acquisition
Agreement") dated April 7, 1997, between the Company, AHL and Bodycote
International PLC, a United Kingdom corporation ("Bodycote"), the sole
shareholder of Supercraft. Supercraft is a leading European manufacturer and
distributor of military apparel, high visibility garments and bullet resistant
vests to law enforcement and military agencies through Europe, the Middle East
and Asia.
Pursuant to the terms of the Supercraft Acquisition
Agreement, as consideration for the Supercraft Shares, AHL paid to Bodycote:
(i) (pound)813,500 in cash at closing (the "Initial Consideration"), which is
subject to adjustment in the event Supercraft's net assets, as shown in
the Completion Accounts of Supercraft, are less than (pound)825,000; (ii)
(pound)536,500, which was placed in a segregated account pending the final
disposition of title to certain real property acquired by AHL from Bodycote;
and (iii) certain deferred compensation in an amount not to exceed
(pound)250,000, if Supercraft's profit before interest (income or expense) and
taxes (as computed in accordance with the accounting principles adopted by
Supercraft and consistently applied but subject to United Kingdom generally
accepted accounting principles) for the fiscal year ended December 31, 1997
exceeds (pound)350,000. In addition, AHL loaned (pound)400,000 to Supercraft in
exchange for a promissory note of Supercraft.
AHL funded the acquisition from working capital of the
Company.
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The foregoing description of the Supercraft Acquisition
Agreement and the transactions contemplated thereby is not intended to be
complete and is qualified in its entirety by the complete text of the
Supercraft Acquisition Agreement. Capitalized terms not otherwise defined
shall have their respective meanings as set forth in the Supercraft
Acquisition Agreement.
DSL GROUP LIMITED
On April 16, 1997 (the "Completion Date") pursuant to an
agreement (the "DSL Purchase Agreement") for the sale and purchase of the
whole of the issued share capital of DSL Group Limited ("DSL") between the
Company, AHL (AHL, together with the Company, hereinafter being referred to as
the "Purchasers"), the Institutional Vendors, the Management Vendors
(collectively, the "Vendors") and Martin Brayshaw, the Company agreed to
acquire all of the issued ordinary and deferred share capital of DSL and AHL
agreed to acquire all of the issued preference share capital of DSL (together,
the "DSL Shares") from the Vendors (the "DSL Acquisition"). DSL's core business
is devising and then implementing solutions to complex security problems in
high risk areas. DSL's services encompass the provision of detailed threat
assessments, security planning, security training, the provision, training and
supervision of specialist manpower and other services up to the implementation
and management of fully integrated security systems. Pursuant to the terms of
the DSL Purchase Agreement, the Purchasers agreed to purchase the DSL Shares
from the Vendors, and as consideration therefor (i) in respect of all of the
outstanding ordinary share capital of DSL, the Company issued to the Vendors
1,274,217 shares of common stock, $0.01 per share (the "Common Stock"), of the
Company (the "Consideration Shares") having a value, when valued in accordance
with the DSL Purchase Agreement, equal to (pound)6,725,656, (ii) in respect of
all of the outstanding deferred share capital of DSL, the Company paid the sum
of (pound)1 in the aggregate (which the Vendors requested and authorized the
Purchasers to retain and apply for the benefit of DSL) and (iii) in respect of
all of the outstanding preference share capital of DSL, AHL paid the sum of
(pound)4,635,000 in the aggregate. All of the DSL Shares were acquired
together with all rights to unpaid dividends, including in particular the
right to an aggregate dividend of (pound)235,000 accrued in respect of the
preference shares. In addition, the Company also paid $6,850,000 plus
interest to N.M. Rothschild & Sons Limited ("Rothschild") in repayment of
DSL's outstanding balance on its credit facility with Rothschild (the
"Rothschild Debt").
In connection with the execution of the DSL Purchase
Agreement, the Company agreed to register the Consideration Shares for sale
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant
to the terms of a Registration Rights Agreement between the Company and the
Vendors (the "Registration Rights Agreement").
Pursuant to the terms of the Registration Rights Agreement,
the Holders are entitled to one (1) demand registration right. On the Completion
Date, three Holders, NatWest Ventures Nominees Limited, Phoenix General Partner
Limited and Compass Representatives Limited served a Demand upon the Company
to register under the Securities Act all of the Registrable Securities held
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by such Electing Holders. Pursuant to the Demand and the terms of the
Registration Rights Agreement, the Company is obligated to file with the
Securities and Exchange Commission an appropriate Registration Statement under
the Securities Act with respect to the Shares by May 16, 1997. As soon as
practicable, and in any event by July 10, 1997, the Company shall cause to be
published combined operating results of the Company, including at least thirty
(30) days of combined sales and net income of the Company, its consolidated
subsidiaries and DSL and its consolidated subsidiaries following the
Completion Date (the "Combined Results"). The Company agreed to use its best
efforts to cause the Registration Statement to be declared effective as soon
as practicable after publication of the Combined Results.
In addition to the demand registration right, if at any time
within one (1) year after the Completion Date, the Company proposes to file a
Registration Statement under the Securities Act (except in certain
circumstances) relating to a public offering of the Company's Common Stock
after Jonathan M. Spiller, the President and Chief Executive Officer of the
Company, has sold, transferred or disposed or proposes to sell, transfer, or
dispose of, shares of Common Stock held by him in excess of 64,666 shares,
then the Holders that own Registrable Securities shall have a piggyback right
to register certain of their Registrable Securities pursuant to such
Registration Statement. The Holders are entitled to an unlimited number of
piggyback registrations.
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Pursuant to the DSL Purchase Agreement, certain of the
Management Vendors (the "Warrantors") made representations and warranties to
the Purchasers. In order to secure the obligations of the Warrantors in
respect of these representations and warranties, the Warrantors agreed to
deliver to Ashurst Morris Crisp, solicitors, in London, as escrow agent (the
"Escrow Agent"), an aggregate of 49,694 of the Consideration Shares (the
"Escrow Shares"), to be held in escrow until the earlier of April 16, 1998 and
the issuance by the Company of its audited accounts for the year ending
December 31, 1997, provided that the Escrow Shares will be retained in escrow
beyond such date if, prior thereto, the Company, among other things, makes a
warranty claim against the relevant Warrantor.
Subject to any rights in favor of third parties that may be
granted by the Warrantors, each Warrantor shall be entitled to vote the shares
of Common Stock in the Escrow Fund deposited by such Warrantor and to receive
dividends thereon, when, as and if declared by the Board of Directors of the
Company.
The foregoing descriptions of the DSL Purchase Agreement,
the Escrow Agreement and the Registration Rights Agreement and the
transactions contemplated thereby are not intended to be complete and are
qualified in their entirety by the complete texts of the DSL Purchase
Agreement, the Escrow Agreement and the Registration Rights Agreement.
Capitalized terms not otherwise defined herein shall have their respective
meanings as set forth in such agreements.
The Company funded the cash acquisition of the preference
shares, the repayment of the Rothschild Debt and the payment of other fees and
expenses by drawing down on its revolving credit facility with Barnett Bank,
N.A. in the amount of $15,400,000. The terms of the Company's revolving
credit facility with Barnett Bank, N.A. are hereinafter described in Item 5.
ITEM 5. OTHER EVENTS
On March 26, 1997, the Company restructured its existing
credit facility with Barnett Bank, N.A. ("Barnett Bank") pursuant to an
Amended and Restated Loan Agreement (the "Loan Agreement") dated March 26,
1997, between the Company and Barnett Bank. Pursuant to the Loan Agreement,
Barnett Bank established a $20,000,000 revolving line of credit (the "Credit
Facility") for the benefit of the Company. The Company's indebtedness under
such revolving credit facility is evidenced by a Renewal Promissory Note in
the principal amount of $20,000,000 bearing interest at a rate of either (i)
Barnett Bank's prime rate less one-quarter of one percent (.25%) or (ii) an
adjusted LIBOR rate equal to 2.25% per annum over the LIBOR
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rate, as selected by the Company. In addition, the Loan Agreement provides
that Barnett Bank will make available to the Company an acceptance facility,
subject to the terms and conditions of an Acceptance Credit Agreement dated
November 14, 1996, as amended, between the Company and Barnett Bank. The
maximum amount of acceptances under this facility outstanding at any time
cannot exceed $5,000,000. Barnett Bank will also issue to the Company letters
of credit pursuant to reimbursement agreements to be entered into from time to
time between the Company and Barnett Bank. The amount of any acceptances or
letters of credit shall be counted towards the revolving credit facility,
which is in the maximum principal amount of $20,000,000.
As part of the Loan Agreement, NIK Public Safety, Inc.
("NIK"), Armor Holdings Properties, Inc. and Defense Technology Corporation of
America ("DTC," NIK, Armor Holdings Properties, Inc. and DTC collectively, the
"Subsidiaries") reaffirmed each of their prior obligations to Barnett Bank to
act as a guarantor for the Company's obligations under the Loan Agreement
pursuant to a Guaranty of Payment (the "Guaranty"). The Loan Agreement is
secured by a security interest in all of the assets of the Company and each of
the Subsidiaries. Each such security interest is evidenced by a separate
Amended and Restated Security Agreement between Barnett Bank, the Company and
each of the Subsidiaries (the "Amended and Restated Security Agreement"). In
addition, as further collateral for the Credit Facility (i) the Company
entered into a Pledge Agreement with Barnett Bank pursuant to which the
Company pledged as further collateral for the Loan Agreement, all of the
issued and outstanding capital stock of the Subsidiaries, and (ii) NIK and DTC
entered into a Collateral Assignment with Barnett Bank (the "Collateral
Assignment") pursuant to which they each granted a security interest in the
trademarks and patents owned by each entity. The Company agreed to cause any
newly formed or acquired subsidiaries to enter into an Amended and Restated
Security Agreement, a Collateral Assignment and a Guaranty, as appropriate, to
secure the Company's obligations to Barnett Bank under the Loan Agreement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA
FINANCIAL INFORMATION AND EXHIBITS
(a) and (b) Financial Statements and Pro Forma Financial
Information.
It is impracticable at this time for the Company to provide
the financial statements that may be required to be included herein. The
Company hereby undertakes to file such required financial statements and pro
forma financial information as soon as practicable, but in no event later than
June 21, 1997.
(c) Exhibits.
The following Exhibits are hereby filed as part of this
Current Report on Form 8-K.
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<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<S> <C>
2.1 Share Acquisition Agreement, dated as of April 7,1997, between Bodycote, AHL
and the Company.
2.2 Agreement for the Sale and Purchase of the Whole of the Issued Share Capital of
DSL Group Limited, dated April 16, 1997, between the Company, AHL, NatWest
Ventures Nominees Limited and Others and Martin Brayshaw.
10.1 Tax Deed, dated April 7, 1997, between the Company and Bodycote.
10.2 Form of Escrow Agreement, dated April 16, 1997, between the Company, the
Warrantors and Ashurst Morris Crisp.
10.3 Form of Registration Rights Agreement, dated April 16, 1997, between the
Company and the Vendors.
10.4 Amended and Restated Loan Agreement dated March 26, 1997, between the
Company and Barnett Bank.
10.5 Renewal Promissory Note, dated March 26, 1997, made by Armor Holdings, Inc.
in favor of Barnett Bank.
10.6 Form of Amended and Restated Security Agreement, dated March
26, 1997, made by each of the Company and the Subsidiaries
in favor of Barnett Bank.
10.7 Pledge Agreement, dated March 26, 1997, made by the Company in favor of
Barnett Bank.
10.8 Form of Collateral Assignment, dated March 26, 1997, made by each of Defense
Technology Corporation of America and NIK Public Safety, Inc. in favor of
Barnett Bank.
10.9 Amendment to Acceptance Credit Agreement, dated March 26, 1997, between the
Company and Barnett Bank.
10.10 Consent with respect to Guaranty of Payment, dated as of March 26, 1997, of NIK
Public Safety, Inc., Armor Holdings Properties, Inc. and Defense Technology
Corporation of America.
10.11 Form of Guaranty of Payment, dated November 14, 1996.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ARMOR HOLDINGS, INC.
/s/ Jonathan M. Spiller
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Jonathan M. Spiller
President and Chief Executive Officer
Dated: April 22, 1997
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EXHIBIT INDEX
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<S> <C>
2.1 Share Acquisition Agreement, dated as of April 7,1997, between Bodycote, AHL
and the Company.
2.2 Agreement for the Sale and Purchase of the Whole of the Issued Share Capital of
DSL Group Limited, dated April 16, 1997, between the Company, AHL, NatWest
Ventures Nominees Limited and Others and Martin Brayshaw.
10.1 Tax Deed, dated April 7, 1997, between the Company and Bodycote.
10.2 Form of Escrow Agreement, dated April 16, 1997, between the Company, the
Warrantors and Ashurst Morris Crisp.
10.3 Form of Registration Rights Agreement, dated April 16, 1997, between the
Company and the Vendors.
10.4 Amended and Restated Loan Agreement dated March 26, 1997, between the
Company and Barnett Bank.
10.5 Renewal Promissory Note, dated March 26, 1997, made by Armor Holdings, Inc.
in favor of Barnett Bank.
10.6 Form of Amended and Restated Security Agreement, dated March
26, 1997, made by each of the Company and the Subsidiaries
in favor of Barnett Bank.
10.7 Pledge Agreement, dated March 26, 1997, made by the Company in favor of
Barnett Bank.
10.8 Form of Collateral Assignment, dated March 26, 1997, made by each of Defense
Technology Corporation of America and NIK Public Safety, Inc. in favor of
Barnett Bank.
10.9 Amendment to Acceptance Credit Agreement, dated March 26, 1997, between the
Company and Barnett Bank.
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<CAPTION>
EXHIBIT DESCRIPTION
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10.10 Consent with respect to Guaranty of Payment, dated as of March 26, 1997, of NIK
Public Safety, Inc., Armor Holdings Properties, Inc. and Defense Technology
Corporation of America.
10.11 Form of Guaranty of Payment, dated November 14, 1996.
</TABLE>
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Exhibit 2.1
DATED 7 APRIL 1997
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(1) BODYCOTE INTERNATIONAL PLC
(2) ARMOR HOLDINGS LIMITED
(3) ARMOR HOLDINGS INC
SHARE ACQUISITION AGREEMENT
RELATING TO
SUPERCRAFT (GARMENTS) LIMITED
TRAVERS SMITH BRAITHWAITE
10 SNOW HILL
LONDON EC1A 2AL
TELEPHONE 0171-248 9133
<PAGE>
CONTENTS
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CLAUSE OF AGREEMENT PAGE
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1 Definitions and interpretation 1
2 Sale of Shares 4
3 Consideration 4
4 Warranties 5
5 Announcements and confidentiality 6
6 Completion 7
7 Completion accounts 7
8 Covenants by the Vendor 8
9 Purchaser's Covenant 11
10 Costs 12
11 Restrictive Trade Practices Act 1976 12
12 Pensions 12
13 General 14
14 Notices 15
15 Applicable law and jurisdiction 15
16 Indemnity 15
SCHEDULES
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1 Particulars of the Vendor, the Purchaser and the Guarantor 17
2 Particulars of the Company 18
3 Completion obligations 19
4 General Warranties 21
5 Warranties relating to Taxation 34
6 Details of the Properties and Warranties relating to 43
The Properties
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7 Warranties relating to environmental matters 45
8 Deferred Consideration 46
9 Completion Accounts Principles 50
10 Vendor Limitation 52
11 Retention 55
DOCUMENTS IN THE APPROVED TERMS
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1 Tax Deed
2 Letter(s) of resignation
3 Board minutes of the Company
4 Power of attorney
ANNEXURES
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1 Accounts
2 List of Disclosure Documents
3 Warranted Information
<PAGE>
THIS AGREEMENT is made on 7 April 1997
BETWEEN:-
(1) BODYCOTE INTERNATIONAL PLC particulars of which are set out in Part I of
Schedule 1 ("THE VENDOR");
(2) ARMOR HOLDINGS LIMITED particulars of which are set out in Part II of
Schedule 1 ("THE PURCHASER").
(3) ARMOR HOLDINGS INC particulars of which are set out in Part II of Schedule
1 ("THE GUARANTOR");
IT IS AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
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1.1 The following words and expressions where used in this Agreement have the
meanings given to them below:-
Accounts the audited balance sheet of the Company
as at the Accounts Date and the audited
profit and loss account of the Company
for the financial year ended on the
Accounts Date, together in each case
with the related notes, directors'
report and auditors' report a true copy
of which comprises Annexure 1;
Accounts Date 31 December 1996;
Business Day a weekday, other than a Saturday, on
which clearing banks are ordinarily open
for business in the City of London;
Companies Act the Companies Act 1985;
Company Supercraft (Garments) Limited, details
of which are set out in Part I of
Schedule 2;
Completion the performance of the obligations to
complete the sale and purchase of the
Shares in accordance with Schedule 3;
Completion Accounts the balance sheet of the Company as at
31 March 1997 and all attached notes to
be prepared in accordance with, and as
constituted as such under, clause 7;
Completion Date the date on which Completion occurs;
<PAGE>
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Consideration the consideration for the sale and
purchase of the Shares as stated in
clause 3;
Copyright the copyright and design right in all
the works and designs (as defined in the
Copyright, Designs and Patents Act 1988)
in the possession or control of or used
by the Company;
Disclosure Letter the letter of the same date as this
Agreement (including its annexures) from
the Vendor to the Purchaser containing
the disclosures to the Warranties;
EEC Treaty the Treaty establishing the European
Economic Community;
Excluded Tax any liability to PAYE and NI interest
and penalties arising out of the PAYE
investigation carried out in January
1997 save to the extent provided for in
the Accounts;
Guarantor's Group the Guarantor and its subsidiary
undertakings from time to time;
ICTA 1988 the Income and Corporation Taxes Act
1988;
Intellectual Property patents, trade marks, registered
designs, applications for any of the
foregoing, copyright design rights and
analogous rights, trade and business
names, rights in confidential
information howsoever arising and any
right or interest in any of the
foregoing;
Know-How inventions, discoveries, improvements,
processes, formulae, techniques,
designs, specifications, drawings,
technical information, methods, test
reports, component lists, manuals,
instructions, catalogues and information
relating to customers and suppliers;
LIBOR London Interbank Offered Rate;
London Stock Exchange London Stock Exchange Limited;
Oldham Property that freehold land known as Alliance
Mill Willow Street Mumps, Oldham more
particularly described in a transfer
between the Company and Bodycote
Developments Limited
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dated 25 March 1997;
Property the property, details of which are set
out in Part I of Schedule 6;
Purchaser's Accountants Deloitte & Touche;
Purchaser Group Company the Purchaser or any of its subsidiaries
from time to time;
Purchaser's Solicitors Travers Smith Braithwaite;
Service Agreements the service agreements in the approved
terms to be entered into at Completion;
Shares the ordinary shares of (pound)1 each in
the capital of the Company to be
acquired by the Purchaser in accordance
with this Agreement;
Tax Deed the deed in the approved terms relating
to taxation to be executed at
Completion;
UK GAAP United Kingdom generally accepted
accounting principles;
Vendor Group the group of companies comprising each
holding company of the Vendor and each
subsidiary of each such holding company,
excluding the Company;
Vendor's Accountants Rawlinson, Hargreaves, Smith and Wood;
Vendor's Solicitors Eversheds, Manchester;
Warranties the representations and warranties set
out in Schedules 4, 5, 6 and 7.
1.2 Where used in this Agreement the terms "SUBSIDIARY", "SUBSIDIARY
UNDERTAKING", "HOLDING COMPANY", "FINANCIAL YEAR", "DIRECTOR" and "SHADOW
DIRECTOR" shall have the meanings respectively attributed to them by the
Companies Act at the date of this Agreement; the term "RECOGNISED INVESTMENT
EXCHANGE" shall have the meaning attributed to it by Part V of the Financial
Services Act 1986 at the date of this Agreement; the term "CONNECTED PERSON"
shall have the meaning attributed to it by section 839 ICTA 1988 at the date of
this Agreement and the words "CONNECTED WITH" shall be construed accordingly;
the term "TAXATION" shall have the meaning attributed to "TAXATION" in the Tax
Deed; and the expression "FOR TAXATION PURPOSES" shall have the meaning
attributed to it in the Tax Deed.
1.3 A reference to any statutory provision in this Agreement:-
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1.3.1 includes any order, instrument, plan, regulation, permission and
direction made or issued under such statutory provision or deriving
validity from it; and
1.3.2 shall be construed as a reference to such statutory provision as in
force at the Completion Date (including, for the avoidance of doubt, any
amendments made to such statutory provision that are in force at the
Completion Date); and
1.3.3 shall also be construed as a reference to any statutory provision of
which such statutory provision is a re-enactment or consolidation.
1.4 The headings in this Agreement are for convenience only and shall not
affect its meaning.
1.5 References to a clause, Schedule or paragraph are (unless otherwise stated)
to a clause of and Schedule to this Agreement and to a paragraph of the
relevant Schedule.
1.6 A document expressed to be "IN THE APPROVED TERMS" means a document, the
terms, conditions and form of which have been agreed by the parties to this
Agreement and a copy of which has been identified as such and initialled by or
on behalf of each of the parties.
1.7 A document expressed to be an "Annexure" means a document a copy of which
has been identified as such and initialled by or on behalf of each of the
parties.
1.8 Words importing one gender shall (where appropriate) include any other
gender and words importing the singular shall (where appropriate) include the
plural and vice versa.
2. SALE OF SHARES
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2.1 The Vendor shall sell or procure to be sold and the Purchaser shall
purchase the Shares upon and subject to the terms and conditions of this
Agreement.
2.2 The Vendor shall procure that the Purchaser acquires good title to the
Shares free from all liens, charges, encumbrances, equities and claims
whatsoever and together with all rights now or hereafter attaching to them.
2.3 The Purchaser shall not be obliged to complete the purchase of any of the
Shares unless the purchase of all of the Shares is completed simultaneously.
3. CONSIDERATION
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3.1 The consideration for the sale and purchase of the Shares shall be the
aggregate of:-
3.1.1 the initial consideration amounting to the sum of (pound)813,500
("THE INITIAL CONSIDERATION") which shall be paid in cash by the Purchaser
to the Vendor on Completion;
3.1.2 consideration amounting to (pound)536,500 ("THE RETENTION") which
shall be paid by the Purchaser in accordance with Schedule 11;
<PAGE>
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3.1.3 the deferred consideration (if any) which shall be calculated and
payable in accordance with the provisions of Schedule 8 ("THE DEFERRED
CONSIDERATION");
provided that the amount payable pursuant to clause 3.1.1 shall be adjusted by
deducting the amount, if any, by which the Company's net assets as shown in the
Completion Accounts are less than (pound)825,000 ("THE SHORTFALL"). If the net
assets as shown in the Completion Accounts exceed (pound)825,000 then the
Purchaser shall pay such excess (up to a maximum of (pound)10,000) to the
Vendor at the same time as the Vendor would have made repayment under clause
3.2.
3.2 Within 10 Business Days starting on the day after the day on which
agreement or determination of the Completion Accounts has occurred in
accordance with clause 7, if the net assets of the Company as shown in the
Completion Accounts are less than (pound)825,000, the Vendor shall repay to the
Purchaser the amount of the Shortfall.
3.3 If the Vendor fails to pay any sum due by it under clause 3.2 on the due
date for payment in accordance with the provision thereof:-
3.3.1 they shall pay interest on the sum from the due date until the date
on which their obligation to pay such sum is discharged at the rate of 3
per cent. per annum above the base rate of Bank of Scotland from time to
time (whether before or after judgement) (interest accrues and is payable
from day to day); and
3.3.2 if any such sum and interest thereon is outstanding ("THE OUTSTANDING
SHORTFALL") on the date the Deferred Consideration is due to be paid then
the Deferred Consideration shall be reduced by the amount of the
Outstanding Shortfall.
3.4 In consideration of the Vendor entering into this Agreement with the
Purchaser at the request of the Guarantor, the Guarantor hereby irrevocably and
unconditionally, as primary obligor, undertakes and guarantees the full, prompt
and complete performance by the Purchaser of its obligation to pay the Deferred
Consideration pursuant to this Agreement when the same shall become due and
undertakes with the Vendor that if the Purchaser shall default in the payment
of the Deferred Consideration under this Agreement the Guarantor shall
forthwith on demand by the Vendor pay such sum to the Vendor.
4. WARRANTIES
- --------------
4.1 The Vendor, upon the execution of this Agreement, warrants and represents
to the Purchaser in the terms of the Warranties.
4.2 The Warranties are given subject only to matters fairly and accurately
disclosed in the Disclosure Letter, but no other information of which the
Purchaser has knowledge (actual or constructive) shall prejudice any claim made
by the Purchaser under the Warranties or operate to reduce any amount
recoverable.
4.3 The Warranties shall continue in full force and effect notwithstanding
Completion.
4.4 Where any statement in the Warranties is qualified by the expression "to
the best of
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the knowledge, information and belief of the Vendor" or "so far as the Vendor
is aware" or any similar expression, the Vendor shall be deemed to have
knowledge of anything of which it has knowledge, would have had knowledge or
ought reasonably to have had knowledge had it made due and careful enquiry
immediately before giving the Warranties of the Company's directors, Jason Teal
or Graham Pearson and the Company's auditors and solicitors.
4.5 Each of the Warranties shall be separate and independent and, save as
expressly provided, shall not be limited by reference to any other Warranty or
any other provision in this Agreement.
4.6 The Vendor undertakes not to exercise any right of counterclaim or set-off
or any other claim or right of recovery against the Company or any of its
officers or employees in relation to any claim which may be made in respect of
the Warranties or under the Tax Deed.
4.7 Save in the event of fraud or wilful non-disclosure on its part, the Vendor
shall be under no liability:-
4.7.1 for breach of any of the Warranties in Schedule 4 (other than those
in paragraphs 2.2, 4.2.4 and 4.2.5) or Schedule 6 or 7 unless written
notice of the claim has been given to the Vendor by or on behalf of the
Purchaser on or before whichever is the later of 30 April 1999 and the date
which is three calendar months after the date of the auditors' report on
the audited accounts of the Company for its financial year ending 31
December 1998; or
4.7.2 for breach of any of the Warranties in Schedule 5 or in paragraphs
4.2.4 and 4.2.5 of Schedule 4 or in respect of any claim under the Tax Deed
unless written notice of the claim has been given to the Vendor by or on
behalf of the Purchaser on or before the date which is three calendar
months after the accounting period of the Company to end six years after
the Completion Date.
and in each such case unless legal proceedings are served upon the Vendor
within 6 months after such notice of claim is given to the Vendor.
4.8 The Purchaser acknowledges that it does not enter into this Agreement in
reliance on any warranty, representation, undertaking, stipulation or agreement
other than those contained in this Agreement and all documentation to be
entered into pursuant to this Agreement including all agreed form documents,
annexures (and documents referred to therein) and for the avoidance of doubt,
the Disclosure Letter and all annexures thereto (and documents referred to
therein).
4.9 Notwithstanding any other provisions of this Agreement the liability of the
Vendor for breach of warranty hereunder shall be limited in accordance with the
provisions of Schedule 10 to the said Agreement.
5. ANNOUNCEMENTS AND CONFIDENTIALITY
- -------------------------------------
5.1 No announcement relating to the subject matter of this Agreement or any
matter ancillary to this Agreement (save for the announcement already made by
the Guarantor in
<PAGE>
- 7 -
the United States of America dated 10 February 1997) shall be made by or on
behalf of the Vendor or the Purchaser without the prior written approval of the
other provided that nothing shall prevent the Purchaser or the Vendor (or any
person on its behalf) making (so long as it has consulted with the other party
in advance so far as reasonably practicable) any announcement or disclosure
required by federal or state securities laws, or any other US or UK law, The
Stock Exchange or any other US or UK regulatory authority.
5.2 The Vendor shall keep confidential and not at any time after the date of
this Agreement disclose or make known in any way to anyone (other than the
Purchaser) or use for its own or any other person's benefit any Know-How or
confidential information relating to any of the customers, suppliers or affairs
of the businesses (including any prospective businesses planned by the Company
immediately prior to Completion) of the Company or otherwise relating to the
business of the Company.
5.3 All records, papers and documents in the possession, custody or control of
or kept or made by or on behalf of the Vendor relating to the business or
affairs of the Company and of which the Company does not have a record or copy
shall be deemed to be the property of the Company and all such items shall be
delivered to the Purchaser or as the Purchaser may direct at Completion.
6. COMPLETION
- --------------
Completion shall take place at the offices of the Purchasers Solicitors
immediately after execution of this Agreement. On such date the Vendor and the
Purchaser shall each perform their respective obligations in relation to the
sale and purchase of the Shares in accordance with and as set out in Schedule
3.
7. COMPLETION ACCOUNTS
- -----------------------
7.1 After Completion the Purchaser and (so far as it lies within its power) the
Vendor shall procure that the Company prepares draft Completion Accounts with
the assistance of the Vendors' Accountants.
7.2 Except as provided in Schedule 9, the Completion Accounts shall be prepared
on a basis consistent with the Accounts using the same accounting principles,
policies and practices, but subject to the same complying with the law and UK
GAAP.
7.3 The Vendor and the Purchaser shall ensure that within 60 days starting on
the day after Completion the Vendor's Accountants submit to the Vendor and the
Purchaser the draft Completion Accounts and (subject to the Vendor and the
Purchaser and the Purchaser's Accountants signing a waiver letter in the
approved terms) make available their working papers to the Vendor and the
Purchaser's Accountants and submit a report by the Vendors' Accountants
addressed to the Purchaser and the Vendor stating whether in their opinion the
draft Completion Accounts have been prepared in accordance with clause 7.2. The
Vendor and the Purchaser shall each ensure that within 15 days starting on the
day after receipt of the draft Completion Accounts ("the Prescribed Period") it
certifies whether or not it agrees with the draft Completion Accounts.
7.4 For the purposes of this Agreement, the Completion Accounts arising
following the occurrence of any of the following shall constitute the
"Completion Accounts":-
<PAGE>
- 8 -
7.4.1 if the Purchaser and Vendor both certify their agreement with the
draft Completion Accounts produced under clause 7.3 within the Prescribed
Period, then such draft Completion Accounts; or
7.4.2 if either the Purchaser or the Vendor certifies its disagreement with
the draft Completion Accounts under clause 7.3 within the Prescribed
Period, either
(1) the Completion Accounts resulting from agreement between the
Vendor and the Purchaser; or
(2) the draft Completion Accounts as adjusted by and therefore
incorporating all those matters decided upon by the Expert
pursuant to clause 7.5; or
7.4.3 if either the Purchaser or Vendor fails to give the certificate
required by clause 7.3 (and the other party has provided such a
certificate) within the Prescribed Period, the draft Completion Accounts
produced under clause 7.3.
7.5 If within 14 days starting on the day after receipt of a certificate of
disagreement referred to in clause 7.4 the Vendor and the Purchaser have not
agreed on the Completion Accounts or the Vendor and the Purchaser have not
agreed on the amount of the consideration payable under clause 3.1.1, the
following provisions shall apply. Either party may refer the matters with which
either the Purchaser or Vendor disagrees to an independent firm of chartered
accountants agreed by the Vendor and the Purchaser or, in default of agreement
within 28 days of the date of receipt of the certificate, an independent firm
of chartered accountants nominated by the President for the time being of the
Institute of Chartered Accountants in England and Wales (the "Expert"), on the
basis that the Expert is to make a decision on the matter or matters identified
in that or those certificates of disagreement (and not agreed by the other
party) and certify his decision in writing to each of the Purchaser and the
Vendor within 28 days starting on the day after receiving the reference. In a
reference, the Expert shall act as an expert and not as an arbitrator. The
decision of the Expert shall, in the absence of fraud or manifest error, be
final and binding on the parties. The Vendor and the Purchaser shall pay the
Expert's costs as the Expert shall direct.
7.6 The costs and expenses of the Purchaser's Accountants and the Vendors'
Accountants shall be borne by the Vendor and the Purchaser respectively, and
none of such costs and expenses will be borne by the Company.
8. COVENANTS BY THE VENDOR
- ---------------------------
8.1 The Vendor covenants with the Purchaser and the Guarantor for the benefit
of the Guarantor's Group that it will not either on its own account or in
conjunction with or on behalf of any other person or persons, whether directly
or indirectly, for the period of:-
8.1.1 2 years from the Completion Date:-
(a) supply goods to; or
(b) provide services for;
<PAGE>
- 9 -
any person, firm or company which was at the Completion Date, or which
during the period of twelve months prior to the Completion Date had been, a
customer of the Company where such goods or services are the same as or
compete with goods supplied or services provided by the Company to that
person, firm or company at or during the period of twelve months prior to
the Completion Date;
8.1.2 2 years from the Completion Date:-
(a) solicit; or
(b) endeavour to solicit;
the custom of any person, firm or company which was at the Completion Date,
or which during the period of twelve months prior to the Completion Date
had been, a customer of the Company for the supply of goods or the
provision of services which are the same as or compete with those supplied
or provided by the Company to that person, firm or company at or during the
period of twelve months prior to the Completion Date;
8.1.3 2 years from the Completion Date:-
(a) solicit or entice away from the Purchaser or the Company ; or
(b) endeavour to solicit or entice away from the Purchaser or the Company;
or
(c) employ or engage; or
(d) endeavour to employ or engage;
any person who was at the Completion Date, or who during the period of six
months prior to the Completion Date had been, employed by the Company
whether or not such person would commit a breach of his or her contract of
employment by reason of leaving service, save that this clause 8.1.3 shall
not apply to any individual employed by the Company in a purely secretarial
or non-managerial administrative role; and
8.1.4 2 years from the Completion Date:-
(a) carry on; or
(b) be engaged; or
(c) be concerned; or
(d) be interested;
in the UK in the business of development, production and the sale of body
armour, ballistic protections, riot gas, anti-riot products, less than
lethal munitions, narcotic identification equipment and security services
(other than as a holder of securities listed or dealt in on a recognised
investment exchange provided that such holding
<PAGE>
- 10 -
shall not exceed one per cent. of the class of securities of which the said
holding forms part).
8.2 Each of the undertakings contained in clause 8.1 is a separate undertaking
by the Vendor in relation to itself and its interests and shall be enforceable
by the Purchaser separately and independently of its right to enforce any one
or more of the other covenants contained in clause 8.1 and in the event that
any such undertaking shall be found to be void but would be valid if some part
were deleted or the period or area of application were reduced, then such
undertaking shall apply with such modification as may be necessary to make it
valid and effective.
8.3 The Vendor shall give all such assistance and supply or procure to be
supplied all such information, documents and other papers and shall facilitate
access to such accounting books and records of the Vendor Group as the
Purchaser may reasonably request for the purpose of enabling the Purchaser and
the Company to make enquiries of and returns to taxation authorities and to
negotiate any liability the Company may have to taxation.
8.4 The Vendor or its duly authorised agents shall, at the Vendor's sole
expense, prepare drafts of the tax returns and computations for the Company for
all outstanding accounting periods ended on or prior to the Accounts Date ("the
outstanding returns"). The Purchaser will procure that the Company shall sign
or submit the outstanding returns to the relevant taxation authorities without
amendment or with such amendments as the Purchaser or the Purchaser's
Accountants may reasonably require.
8.5 If the Vendor shall indemnify and secure the Company to its reasonable
satisfaction against all losses, costs, damages and expenses (including,
without limitation, interest on overdue taxation) which may be incurred, the
Purchaser shall procure that the Company will take such action and give such
information and assistance as may be reasonably required by the Vendor to agree
the outstanding returns with the relevant taxation authorities. For the
avoidance of doubt, the actions which the Vendor may reasonably request under
this clause shall include the Company applying to postpone (so far as legally
possible) the payment of any taxation but the Vendor shall not be entitled
under this clause to request that it or its agent be allowed to take on or take
over the conduct of all or any proceedings arising in connection with the
agreement of the outstanding returns.
8.6 The Vendor shall apply on behalf of the Company to HM Customs & Excise for
the exclusion of the Company with effect from Completion from any group
registration for the purposes of value added tax of which the Company and the
Vendor Group form part ("the VAT Group"). The Vendor agrees to make such
payments as may be necessary to reimburse the Company for any credit for input
tax which arises in respect of supplies received by the Company in the period
prior to Completion.
8.7 The Purchaser shall at the Vendor's written request procure that the
Company joins in such claims for, or surrenders of, group relief (within the
meaning of section 402 ICTA 1988) for accounting periods ended on or prior to
the Accounts Date as are set out in the outstanding returns. The Vendor shall
pay to the Company surrendering group relief an amount equal to the amount of
taxation to be relieved by virtue of the utilisation of the group relief no
later than nine months after the end of the accounting period in respect of
which taxation is to be relieved by the surrendering of the group relief.
<PAGE>
- 11 -
8.8 The Vendor shall discharge the Excluded Tax (if any) subject to the
Purchaser permitting the Vendor to conduct all negotiations with the
appropriate authorities in respect thereto (for the avoidance of doubt, the
amount of Excluded Tax that the Vendor shall be obliged to discharge shall not
be limited by any restrictions on claims that can be made pursuant to the
Warranties or the Tax Deed).
8.9 Save as specifically detailed in clause 8.8 above, the provisions of
clauses 8.3 to 8.9 are without prejudice to the provisions of the Tax Deed. To
the extent that there is any conflict between the provisions of such clauses
and the provisions of the Tax Deed, the provisions of the Tax Deed shall
prevail.
9. PURCHASER'S COVENANTS
- -------------------------
9.1 The Purchaser shall procure that Joseph Dwek is entitled to remain as a
non-executive director of the Company (or, if he is unable to continue in such
office shall procure that Mr Roger Green is appointed as a non-executive
director of the Company on the same terms) ("the Executive") save that the
Purchaser's obligations pursuant to this clause 9 shall cease to apply, and the
Purchaser shall be entitled to remove Mr Joseph Dwek or Mr Roger Green as the
case may be, in the event that the Executive shall:-
9.1.1 Commit any act of serious misconduct;
9.1.2 Wilfully neglect or refuse, after warning, to carry out any of his
duties as a non-executive director;
9.1.3 Have a bankruptcy order made against him or shall compound with or
enter into any voluntary arrangements with his creditors;
9.1.4 Be charged with or convicted of any criminal offence (other than an
offence under the Road Traffic Acts for which a penalty of imprisonment
cannot be imposed);
9.1.5 Be disqualified from holding office in the Company or any other
company under the Insolvency Act 1986 or the Company Directors
Disqualification Act 1986 or be disqualified or disbarred from membership
of, or be subject to any serious disciplinary sanction by any professional
or other body, which undermines the confidence of the Purchaser in the
Executives continued directorship of the Company;
9.1.6 Act in any way which may in the reasonable opinion of the Purchaser
bring the Company into disrepute or discredit.
Save as aforesaid the Executive shall continue as a non-executive director
entitled to the information and other rights accorded to a non-executive
director by law and general practice until payment of the Deferred
Consideration is made or no such payment has been agreed or determined as
payable.
9.2 The Purchaser shall procure that the Company pays to the Vendor the sum of
(pound)96,281 in cash on or before 1 July 1997 in complete satisfaction of the
Company's obligations to pay such sums to the Vendor in respect of the
outstanding inter-company
<PAGE>
- 12 -
loan from the Vendor to the Company.
10. COSTS
- ----------
Each party shall pay its own costs and expenses incurred in the negotiation,
preparation and execution of this Agreement and the Vendor represents and
undertakes that none of such costs and expenses have been nor will prior to
Completion be borne by the Company.
11. RESTRICTIVE TRADE PRACTICES ACT 1976
- -----------------------------------------
Where this Agreement is or forms part of an agreement which is subject to
registration under the Restrictive Trade Practices Act 1976 ("RTPA"), no
restriction accepted or information provision made under that agreement shall
be given effect to or enforced until the day after particulars of the agreement
have been furnished to the Director General of Fair Trading under section 24
RTPA. If any party shall wish to furnish such particulars, the other parties
will render such co-operation and undertake such action as may reasonably be
required of them for such purpose so that particulars may be furnished as soon
as practicable following the signature of this Agreement and each of the
parties consents to the disclosure of all information so furnished. In this
clause the words and terms "agreement" and "subject to registration" shall have
the meanings respectively given to them by the RTPA and the reference to
"restrictions accepted" or "information provisions made" under the agreement
shall be to restrictions accepted or information provisions made by virtue of
which the agreement is subject to registration.
12. PENSIONS
- -------------
Subject always to compliance by the Purchaser and the Company pursuant to this
clause 12:
12.1 The Vendor shall use all reasonable endeavours to procure the continued
participation of the Company in the Bodycote Group Pension Scheme ("the
Bodycote Scheme") from the Completion Date until 31 December 1997 or until such
earlier date as may be agreed in writing between the Vendor and the Purchaser
("the Transitional Period"). The Purchaser agrees that the continued
participation of the Company remains subject to the approval by the Inland
Revenue of the Bodycote Scheme as an exempt approved scheme (as defined in
section 592 of the Income and Corporation Taxes Act 1988) not being prejudiced.
12.2 The Purchaser shall procure that the Company will pay to the Bodycote
Scheme during the Transitional Period all ordinary contributions payable by and
in respect of Allen Williamson, Jason Teal and Graham Pearson ("the Bodycote
Members") under the trust deed and rules currently governing the Bodycote
Scheme. The Vendor and the Purchaser agree that the rate of those contributions
shall not exceed the rate being paid by and in respect of other members of the
Bodycote Scheme from time to time during the Transitional Period.
12.3 The Vendor undertakes and shall procure that during and in respect of the
Transitional Period the Bodycote Scheme shall be maintained in full force and
effect.
12.4 If the Bodycote Members elect by notice in writing, served upon the
trustees of the
<PAGE>
- 13 -
Bodycote Scheme not later than 31 January 1998 to take a transfer value to the
pension arrangements established by the Purchaser such transfer value shall be
the sum of:
(i) the transfer amount calculated by the actuary to the Bodycote Scheme on a
past service reserve basis as at Completion Date using the assumptions
adopted by the Bodycote Scheme in its last actuarial valuation including
making an allowance for future increases to remuneration and pension
increases; and
(ii) a sum equal to the total contributions payable by or in respect of the
Bodycote Members after deducting sums in respect of administration and
death in service insurance calculated as provided in the report on the
last actuarial valuation of the Bodycote Scheme increased by compound
interest at the base rate of Barclays Bank Plc from the date the
contribution was paid until the end of the Transitional Period.
12.5 The Purchaser undertakes that it will establish or become a party to
either a money purchase retirement benefits scheme in which the Company will
participate or a group personal pension scheme (the "Purchaser's Scheme") in
respect of the Bodycote Members with effect from the day following the end of
the Transitional Period.
12.6 With effect from such day, the Purchaser undertakes to procure that
membership of the Purchaser's Scheme shall be offered to the Bodycote Members.
12.7 The Purchaser undertakes that the Purchaser's Scheme will be capable of
accepting a transfer from the Bodycote Scheme, in accordance with the
provisions of this clause 12, in respect of the Bodycote Members who take up
the offer of membership under this clause and if any Bodycote Member exercises
his option to take a transfer value under clause 12.4 to the Purchaser's
Scheme. Such transfer value will be applied exclusively for or in relation to
the provision in the Purchaser's Scheme of Relevant Benefits (as defined in
Schedule 4) for and in respect of that Bodycote Member.
12.8 The Purchaser undertakes to contribute to the Purchaser's Scheme in
respect of Allen Williamson at a rate which in the opinion of an actuary
appointed by the Purchaser is likely when taken with his contributions to the
Bodycote Scheme at the Completion Date to produce benefits that are broadly
equivalent in overall value to those that would have been provided for him
under the Bodycote Scheme in relation to his future service if he had continued
to be a member of the Bodycote Scheme on the basis of the provisions in force
at the date he left that scheme.
12.9 If the Purchaser's Scheme is not a contracted-out scheme then the
Purchaser will allow Allen Williamson to set up an appropriate personal pension
scheme which will be capable of accepting the guaranteed minimum pensions
arising from service in the Bodycote Scheme prior to 6 April 1997 and all
benefits under the Bodycote Scheme from service after 5 April 1997 for the
Bodycote Members.
12.10 The Purchaser will procure that the Company will comply during the
Transitional Period with the provisions of the Bodycote Scheme insofar as they
apply to it as an associated employer and in particular shall:-
12.10.1 comply with all requirements of the Pensions Act 1995 applicable to
it
<PAGE>
- 14 -
and nominate the principal employer of the Vendor's Scheme as the employer
capable of agreeing the Schedule of contributions and for all other
purposes of that Act;
12.10.2 not exercise any right, power or discretion conferred on the
Company as a participating employer in the Bodycote Scheme without the
prior written consent of the Vendor, such consent not to be unreasonably
withheld;
12.10.3 not increase the remuneration above 2% of Pensionable Salary (as
defined in the Bodycote Scheme Explanatory Booklet effective from 1 April
1995) per annum of any of the Bodycote Members.
12.10.4 if any of the Bodycote Members claim early retirement pensions
(following termination of their contracts of employment by the Company or
the Purchaser) the Purchaser will make such additional contributions to the
Bodycote Scheme as the Vendor, the Trustees of the Bodycote Scheme and the
Purchaser agree are required to cover the additional costs to the Bodycote
Scheme.
12.11 The Vendor and the Guarantor undertake to indemnify the Company and the
Purchaser against any liabilities, costs, claims, losses, damages and expenses
including legal and professional fees which the Purchaser or the Company may
suffer or incur in either case by reason of the Company's participation in the
Bodycote Scheme prior to 1 January 1998 as a result of, or arising under:-
12.11.1 section 75 of the Pensions Act 1995 or section 144 of the Pension
Schemes Act 1993 and any regulations made thereunder; or
12.11.2 the infringement of any English or European Union requirement
relating to the equal treatment of men and women, other than in respect of
failure to equalise guaranteed minimum pensions.
13. GENERAL
- ------------
13.1 This Agreement constitutes the entire and only legally binding agreement
between the parties relating to the sale and purchase of the Shares and no
variation of this Agreement shall be effective unless made in writing signed by
or on behalf of all the parties and expressed to be such a variation.
13.2 No failure or delay by the Purchaser or time or indulgence given by it in
or before exercising any remedy or right under or in relation to this Agreement
shall operate as a waiver of the same nor shall any single or partial exercise
of any remedy or right preclude any further exercise of the same or the
exercise of any other remedy or right.
13.3 No waiver by any party of any requirement of this Agreement or of any
remedy or right under this Agreement shall have effect unless given by notice
in writing signed by such party. No waiver of any particular breach of the
provisions of this Agreement shall operate as a waiver of any repetition of
such breach.
13.4 This Agreement may be executed in two or more counterparts and execution
by each of the parties of any one of such counterparts will constitute due
execution of this
<PAGE>
- 15 -
Agreement.
13.5 The Vendor shall and shall procure that any third party shall, do, execute
and perform all such further deeds, documents, assurances, acts and things as
may be necessary to give effect to this Agreement.
13.6 The provisions of this Agreement shall remain in full force and effect
after Completion so far as they then remain to be observed and performed.
13.7 The Vendor acknowledges that it is entering into this Agreement without
reliance on any undertaking or representation given by or on behalf of the
Purchaser other than as expressly contained in this Agreement provided that
nothing herein shall exclude the Purchaser from liability for fraudulent
misrepresentation.
14. NOTICES
- ------------
14.1 Any notice shall be in writing and signed by or on behalf of the person
giving it. Except in the case of personal service, any notice shall be sent or
delivered to the party to be served at the address set out in Schedule 1 and if
a person or officer is named for the purpose in Schedule 1, the notice shall be
marked for his attention. Any alteration in such details shall, to have effect,
be notified to the other parties in accordance with this clause.
14.2 Service of a notice must be effected by one of the following methods:-
14.2.1 personally on a director or the secretary of any party and shall be
treated as served at the time of such service;
14.2.2 by prepaid first class post (or by airmail if from one country to
another) and shall be treated as served on the second (or if by airmail the
fourth) Business Day after the date of posting. In proving service it shall
be sufficient to prove that the envelope containing the notice was
correctly addressed, postage paid and posted; or
14.2.3 by delivery of the notice through the letterbox of the party to be
served or by sending it by telex and shall be treated as served on the
first Business Day after the date of such delivery or sending. In proving
service by telex it shall be sufficient to prove that the telex was
preceded by the answerback code of the party to whom it was sent.
15. APPLICABLE LAW AND JURISDICTION
- ------------------------------------
15.1 This Agreement shall be governed by and construed in accordance with the
laws of England.
15.2 The parties irrevocably submit to the non-exclusive jurisdiction of the
Courts of England and Wales in respect of any claim, dispute or difference
arising out of or in connection with this Agreement.
16. INDEMNITY
- --------------
<PAGE>
- 16 -
16.1 The Vendor undertakes to indemnify and keep the Purchaser indemnified from
and against liability for all sums (including, without limitation, losses,
damages, costs, expenses, fines, penalties or compensation and any depletion in
or reduction in value of the Company or its assets, or increase in the
liabilities of the Company) suffered or incurred by the Company in respect of
any non-compliance with or any liability under Relevant Laws arising as a
direct or indirect result of any acts or omissions of the Company prior to the
Completion Date affecting the Oldham Property or from the presence of Hazardous
Substances in the land, soil, ground, ground water or surface water at, on or
under the Oldham Property.
For the purpose of this clause 16.1, the following definitions shall apply:-
Environmental Laws means all European Union, national, regional or
local statutes or other laws including the common
law concerning Environmental Matters, all rules,
regulations, by-laws, codes of practice,
circulars, guidance notes and notices made
thereunder and judicial and administrative
interpretation of each of the foregoing provided
that for the avoidance of doubt the provisions
relating to contaminated land contained in the
Environment Act 1995 and any regulations made or
guidance given under that Act shall be treated as
if they were in force on or before Completion;
Environmental Matters means all matters relating to contamination,
pollution or human health or the environment
including but not limited to those relating to
waste, discharges, emissions and releases to land,
air and water, nuisance, health and safety, and
the manufacture, use, treatment, storage,
transport or disposal of Hazardous Substances;
Hazardous Substances means chemicals, wastes, forms of energy,
radioactive substances or other polluting,
dangerous, hazardous or toxic substances;
"Relevant Laws" all Environmental Laws concerning contamination or
pollution of the land, soil, ground, ground water
or surface water at, on, under or in the vicinity
of the Oldham Property.
16.2 The Vendor shall indemnify and keep indemnified the Purchaser for itself
and as trustee for the Company against liability for all sums (including,
without limitation, losses, damages, costs, expenses, fines, penalties or
compensation) suffered or incurred by the Company or the Purchaser as a direct
or indirect result of the declaration and payment of the dividends, amounting
to (pound)614,550 in aggregate, on 25 March 1997, by the Company being unlawful
voidable or void.
AS WITNESS this Agreement has been executed as a deed by or on behalf of the
parties the day and year first before written.
<PAGE>
- 17 -
SCHEDULE 1
----------
PART I
PARTICULARS OF THE VENDOR
- -------------------------
(1) (2)
Vendor Ordinary
Shares
of (pound)1 each
- -------------------------------------------------------------------------------
Bodycote International PLC 29,750
140 Kingsway,
Manchester M19 1BB
For the attention of:-
Joseph Dwek
PART II
PARTICULARS OF PURCHASER
- ------------------------
Armor Holdings Limited (Company No. 3302926)
13386 International Parkway
Jacksonville
Florida 32218
For the attention of:-
Robert Schiller
PARTICULARS OF THE GUARANTOR
- ----------------------------
Armor Holdings Inc
International Parkway
Jacksonville
Florida 32218
For the attention of:-
Robert Schiller
<PAGE>
- 18 -
SCHEDULE 2
----------
PART I
PARTICULARS OF THE COMPANY
- --------------------------
Supercraft (Garments) Limited
Registered in England under no. 328076
Registered Office:- 140 Kingsway, Manchester M19 1BB
Authorised capital:- (pound)45,000
Issued and fully paid up capital:- (pound)29,750
Directors:- Joseph Dwek
Allen Williamson
Secretary:- Clair Griffiths
Accounting reference date:- 31 December
<PAGE>
- 19 -
SCHEDULE 3
----------
COMPLETION OBLIGATIONS
- ----------------------
PART I
OBLIGATIONS OF THE VENDOR
- -------------------------
1. The Vendor shall deliver to the Purchaser:-
1.1 duly executed transfers of the Shares by the registered holders in favour
of the Purchaser, the share certificates and any additional documentation
necessary to establish the transferor's title to the Shares, to authorise the
executions of such transfers and to allow the transferees (subject to due
stamping) to be registered in the register of members of the Company as holders
of the Shares;
1.2 an engrossment of the Tax Deed executed by the Vendor and [the Company];
1.3 the common seal, statutory books and other record books of the Company
written-up to Completion;
1.4 statements of balances at a date not more than seven days prior to
Completion with reconciliations to the Business Day preceding the Completion
Date on all bank accounts of the Company and all current cheque books relating
to such accounts;
1.5 a resignation letter in the approved terms from Claire Griffiths;
1.6 evidence satisfactory to the Purchaser that:-
1.6.1 all sums owed by the Company to any member of the Vendor Group or by
any member of the Vendor Group to the Company (save for the sums detailed
in clause 9.2 of this Agreement) have been repaid;
1.6.2 any guarantees granted or security or indemnities given by the
Company in respect of obligations of any member of the Vendor Group have
been released or discharged;
1.7 an unqualified letter of resignation from the auditors of the Company in
the form prescribed by section 394 Companies Act, accompanied by written
confirmation that such auditors have no claims for unpaid fees or expenses;
1.8 a power of attorney in the approved terms in respect of the rights
attaching to the Shares;
1.9 certified copies of the board minutes of the meetings of the board of
directors of the Company declaring dividends:-
1.9.1 for the year ended 31 December 1996 of(pound)150,000;
1.9.2 for the year ended 31 December 1995 of(pound)129,100; and
<PAGE>
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1.9.3 as an interim dividend declared during the period 31 December 1996 to
25 March 1997 of (pound)400,000;
1.10 bank mandates relating to the change in signatory of all of the Company's
bank accounts;
1.11 a certified copy of the transfer of the Oldham Property from the Company
to Bodycote Developments Limited in the approved terms.
2. The Vendor shall procure the holding of a meeting of the board of directors
of the Company, at which board resolutions in the approved terms shall be
passed.
PART II
OBLIGATIONS OF THE PURCHASER
- ----------------------------
The Purchaser shall, conditionally upon the implementation of the matters set
out in Part I of this Schedule:-
1. authorise the telegraphic transfer of (pound)813,500 in cleared funds to an
account specified by the Vendor, which shall discharge the Purchaser from its
obligation to pay the Initial Consideration to the Vendor;
2. authorise the telegraphic transfer of (pound)536,500 in cleared funds to the
Retention Account; and
3. deliver to the Vendor an engrossment of the Tax Deed executed by the
Purchaser;
<PAGE>
- 21 -
SCHEDULE 4
----------
GENERAL WARRANTIES
- ------------------
ACCURACY OF INFORMATION
- -----------------------
1.1 All written information relating to the business, activities, affairs,
assets or liabilities of the Company provided to the Purchaser or any of its
employees, officers, agents or advisers by or on behalf of the Vendor, the
Company or any of their respective employees, officers, agents or advisers in
the course of the negotiations leading to the execution of this Agreement (as
referred to in the list attached as annexure 3) was when given and is now true
and accurate in all material respects.
1.2 There is no information relating to the Company which is known to the
Vendor which renders any of the information referred to in paragraph 1.1 above
misleading.
1.3 The information contained in Part I of Schedule 1, Schedule 2 and Part I of
Schedule 6 is true and accurate in all respects and is not misleading.
CONSTITUTION OF THE COMPANY
- ---------------------------
2.1 The statutory books and minute books of the Company have been properly kept
and contain an accurate and complete record of the matters which should be
dealt with in those books and no notice or allegation that any of them is
incorrect or should be rectified has been received.
2.2 The Shares are beneficially owned by the Vendor, are free from all liens,
charges and encumbrances or interests in favour of or claims made by or which
could be made by any other person, are fully paid and together represent the
entire allotted and issued share capital of the Company.
2.3 The copy of the memorandum and articles of association of the Company
annexed to the Disclosure Letter is true and complete and has embodied in it or
annexed to it a copy of every such resolution or agreement as is referred to in
section 380(1) Companies Act and sets out in full the rights and restrictions
attaching to the share capital of the Company.
2.4 No person has the right (whether exercisable now or in the future and
whether contingent or not) to call for the issue or transfer of any share or
loan capital of the Company under any option or other agreement or otherwise
howsoever.
2.5 The Company has properly and punctually made all returns which it is
required to make to the Registrar of Companies, to any other governmental or
regulatory body and to any local authority.
2.6 Due compliance has been made with all the provisions of the Companies Act
and other legal requirements, in connection with the formation of the Company,
the allotment, issue, purchase and redemption of shares, debentures and other
securities in the Company, the reduction of the authorised and issued share
capital of the Company, any amendment to the memorandum or articles of
association of the Company and the passing of
<PAGE>
- 22 -
resolutions and the payment of dividends by the Company.
2.7 The Company has at all times conducted its business intra vires, has not
entered into any transaction ultra vires the Company or outside of the
authority or powers of the directors of the Company and is not in breach of the
provisions of the Articles.
CAPACITY AND INTEREST OF THE VENDOR
- -----------------------------------
3.1 The Vendor has the requisite power and authority to enter into and perform
this Agreement and has the requisite power and authority to enter into and
perform the Tax Deed.
3.2 The execution and delivery of and the performance by the Vendor of its
obligations under this Agreement and the Tax Deed will not:-
3.2.1 result in a breach of, or constitute a default under, any agreement,
instrument or arrangement to which the Vendor or the Company is a party or
by which the Vendor or the Company is bound; or
3.2.2 result in a breach of any order, judgement or decree of any court or
governmental agency to which the Vendor or the Company is a party or by
which the Vendor or the Company is bound; or
3.2.3 result in a breach of the rules or requirements of any professional
body, trade association or self-regulating organisation (as defined in the
Financial Services Act 1986) of which the Vendor is a member or by which
the Vendor is bound.
3.3 No indebtedness (actual or contingent) is outstanding and no contract or
arrangement exists between the Company and the Vendor or any director of the
Company or any person connected with the Vendor or such director.
3.4 Neither the Vendor nor any person connected with the Vendor has any
interest, direct or indirect, in any business which competes or has competed or
is in the future likely to compete with any business now carried on by the
Company or intends to acquire any such interest.
3.5 So far as the Vendor is aware it is not entitled to any claim of any nature
against the Company, any of its officers, employees, principal customers or
suppliers and the Vendor has not assigned to any third party the benefit of any
such claim to which it was previously entitled.
ACCOUNTS
- --------
4.1 The Accounts have been prepared in accordance with UK GAAP comply with the
requirements of the Companies Act and show a true and fair view of the state of
affairs and the financial position of the Company as at the Accounts Date and
of the profits or losses of the Company for the financial year ended on the
Accounts Date.
4.2 Without prejudice to the generality of the foregoing, in the Accounts:-
<PAGE>
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4.2.1 depreciation of the fixed assets of the Company has been made at a
rate sufficient to write down the value of such assets to nil not later
than the end of their useful working lives and no fixed asset has
attributed to it a value exceeding its current market value at the Accounts
Date;
4.2.2 the value attributed to stock and work-in-progress does not exceed
the lower of cost and net realisable value at the Accounts Date. For the
purpose of ascertaining the net realisable value of stock at the Accounts
Date, unsaleable, defective and redundant stock and stock which had been
returned or rejected by a customer has been written down to nil;
4.2.3 proper provision, reserve or note (as appropriate) has been made for
all bad and doubtful debts, all liabilities and obligations (actual,
contingent or disputed) and all capital commitments;
4.2.4 provision or reserve (as appropriate) has been made for all taxation
liable to be assessed on the Company or for which the Company is
accountable (whether primarily or otherwise) in respect of income, profits
or gains earned, accrued or received on or before the Accounts Date or
deemed to have been or treated as earned, accrued or received for taxation
purposes and/or for any event on or before the Accounts Date, including
distributions made down to the Accounts Date or provided for in the
Accounts; and
4.2.5 proper provision or reserve (as appropriate) in accordance with UK
GAAP and all relevant Statements of Standard Accounting Practice has been
made in the Accounts for all deferred taxation of the Company.
4.3 The bases and policies of accounting of the Company adopted for the purpose
of preparing the Accounts are the same as those adopted for the purpose of
preparing the audited accounts of the Company for the three preceding
accounting periods and none of the audited accounts of the Company for the five
preceding accounting periods were qualified by the auditors.
4.4 The profits and losses of the Company shown by the Accounts and by the
audited accounts of the Company for the three preceding accounting periods and
the trend of profits and losses thereby shown have not (except as therein
disclosed) been affected to a material extent by any non-recurring,
exceptional, extraordinary or short-term item (including, but not limited to,
any pension contribution holiday or any rental or other outgoing at below
market rates) or by any other matter which has rendered such profits or losses
unusually high or low.
4.5 All books of account and other accounting records of the Company are in its
possession, made up to date and contain the information required by law and
generally accepted accounting principles.
BUSINESS SINCE THE ACCOUNTS DATE
- --------------------------------
5. Since the Accounts Date:-
5.1 the Company has carried on its business in the ordinary and usual course
without any
<PAGE>
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interruption or alteration in the nature, scope or manner of its business;
5.2 there has been no material adverse change in the financial or trading
position or so far as the Vendor is aware prospects of the Company;
5.3 the Company has not knowingly acquired or agreed to acquire any asset for a
consideration which is higher than market value at the time of acquisition and
has not knowingly disposed of or agreed to dispose of any asset for a
consideration which is lower than market value or book value, whichever is the
higher, at the time of disposal;
5.4 the Company has not assumed or incurred any material liabilities (including
contingent liabilities) otherwise than in the ordinary and usual course of
business;
5.5 the Company has not assumed or incurred any liability, or entered into any
commitments involving capital expenditure which is still outstanding, in excess
of (pound)10,000;
5.6 there have been no unusual increases or decreases in stock levels; and
5.7 no distribution of capital or income has been declared, made or paid in
respect of any share in the capital of the Company.
BORROWINGS AND BANK FACILITIES
- ------------------------------
6.1 The Company has not exceeded the amount of its overdraft facility with its
bankers and is not in breach of the terms of any other loan facilities and the
total amount borrowed by the Company from whatsoever source does not exceed any
limitation on its borrowings contained in the Company's articles of association
or in any debenture or loan stock deed or any other instrument or agreement to
which the Company is a party.
6.2 Full and accurate details of all overdrafts, loans or other financial
facilities outstanding or available to the Company are contained in the
Disclosure Letter and neither the Vendor nor the Company has done or omitted to
do anything whereby the continuance of any such facilities in full force and
effect might be affected or prejudiced.
6.3 A statement of all the bank accounts of the Company and of the credit or
debit balances on such accounts as at a date not more than seven days before
the date of this Agreement is annexed to the Disclosure Letter. Since such
statement there have been no payments out of any such accounts except for
routine payments in the ordinary course of business and the balances on current
account are not now substantially different from the balances shown on such
statements.
GUARANTEES AND INDEMNITIES
- --------------------------
7. There is not outstanding any guarantee, indemnity or security given by or
for the benefit of the Company.
<PAGE>
- 25 -
DEBTORS
- -------
8.1 Each debt now owed to the Company (less the amount of any specific or
general provision or reserve made in the Accounts or the Completion Accounts)
will realise its full face value and be good and collectable in the ordinary
course of business and is not subject to any counter-claim or set-off, except
to the extent of any such provision or reserve and no amount included in the
Accounts as owing to the Company at the Accounts Date has been realised for an
amount less than the value at which it was included in the Accounts or has been
released (in whole or in part) or is, so far as the Vendor is aware,
irrecoverable in whole or in part.
8.2 The Company has not granted credit terms exceeding thirty days.
CUSTOMERS AND SUPPLIERS
- -----------------------
9. No material customer or supplier of or to the Company has during the last
twelve months ceased or indicated an intention to cease (or to reduce the
volume of) trading with the Company nor, so far as the Vendor is aware, is
likely so to do whether as a result of this Agreement or otherwise.
OWNERSHIP AND CONDITION OF ASSETS
- ---------------------------------
10.1 Except for assets disposed of by the Company in the ordinary course of
trading, the Company is the owner of all assets included in the balance sheet
of the Accounts and all assets which have been acquired by the Company since
the Accounts Date, all of which assets are in the Company's possession and
under its control and there is not now outstanding any charge, option, lien,
pledge or encumbrance (or agreement to grant any such) over the whole or any
part of the undertaking, property or assets of the Company nor any right to
acquire such.
10.2 All plant and machinery (including fixed plant and machinery), vehicles
and office equipment used by the Company in connection with its business have
been maintained and repaired as required to enable the Company to operate the
same.
10.3 The plant register kept by the Company sets out a complete and accurate
record of the material items of plant and machinery and vehicles owned by it.
10.4 The Company has not agreed to acquire any asset on terms that the property
in such asset does not pass to it until full payment is made.
INSURANCE
- ---------
11.1 All the assets of the Company which are of an insurable nature are at the
date hereof insured in the terms annexed to the Disclosure Letter. In respect
of all such insurances:-
11.1.1 all premiums have been duly paid to date;
11.1.2 all the policies are in force and so far as the Vendor is aware are
not voidable;
<PAGE>
- 26 -
11.1.3 there are no special or unusual terms or restrictions and so far as
the Vendor is aware the premiums payable are not in excess of the normal
rates; and
11.1.4 no claim is outstanding and no circumstances exist which may give
rise to any claim.
GRANTS
- ------
12. The Company has not applied for any investment grant, employment subsidy or
other similar payment and no such grant, subsidy or payment paid or due to be
paid to the Company is liable to be refunded or withheld in whole or in part in
consequence of any action or omission of the Company.
COMPLIANCE WITH LAWS
- --------------------
13. So far as the Vendor is aware neither the Company nor its officers, agents
or employees in the course of their respective duties to the Company have done
or omitted to do anything in breach of the law of the United Kingdom or of any
foreign country in which the Company conducts business.
LICENCES AND CONSENTS
- ---------------------
14. All licences, consents, approvals, permissions, permits and authorities
(public and private) necessary for the carrying on of the business of the
Company effectively in the places and in the manner in which such business is
now carried on have been obtained and all such licences, consents, approvals,
permissions, permits and authorities are valid and subsisting and, so far as
the Vendor is aware, there is no reason why and no facts or circumstances which
would be likely to give rise to any reason why any of them should be suspended,
cancelled or revoked or not renewed.
LITIGATION
- ----------
15.1 The Company is not engaged in any litigation or arbitration proceedings
and no litigation or arbitration proceedings are pending or threatened by or
against the Company, nor so far as the Vendor is aware are there any facts or
circumstances which may give rise to any litigation or arbitration proceedings
being commenced by or against the Company.
15.2 Neither the Company nor any of its officers is being prosecuted for any
criminal offence and so far as the Vendor is aware there are no such
prosecutions pending or threatened and, so far as the Vendor is aware, there
are no facts or circumstances which may give rise to any such prosecution.
15.3 No litigation or arbitration proceedings commenced by or against the
Company or which have been threatened to be so commenced have been settled or
compromised during the period of five years ending on the date of this
Agreement in respect of amounts exceeding in aggregate (pound)20,000.
15.4 The Company is not subject to any order or judgement given by any court,
governmental agency or other regulatory body adversely affecting its business
and is not a party to any undertaking or assurance given to any court,
governmental agency or other
<PAGE>
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regulatory body which is still in force nor so far as the Vendor is aware are
there any facts or circumstances which may result in the Company becoming
subject to any such order or judgement or being required to be a party to any
such undertaking or assurance.
15.5 There have been no investigations of, or disciplinary proceedings made
against, the Company or so far as the Vendor is aware any of its officers or
employees, so far as the Vendor is aware no such investigations or disciplinary
proceedings are currently pending or threatened and, so far as the Vendor is
aware, there are no facts or circumstances which may give rise to such
investigations or proceedings.
16. COMPETITION LAW MATTERS
- ---------------------------
16.1 The Company is not and has not been a party to any agreement (as defined
in the Restrictive Trade Practices Act 1976 ("the RTPA")) which has been
furnished to the Director General of Fair Trading as provided for in the RTPA
or which is or was subject to registration pursuant to the RTPA and which has
not been so furnished.
16.2 The Company has not been and is not a party to any agreement or concerted
practice which infringes Article 85 of the EEC Treaty and is not in
contravention of any regulation or other enactment made under Article 87 of the
EEC Treaty.
16.3 No action, practice or course of conduct now or previously done or carried
on by the Company and no agreement to which the Company is or was a party or
any part of any such agreement:-
16.3.1 so far as the Vendor is aware is or has been the subject of any
investigation or reference under the Competition Act 1980; or
16.3.2 is or was unlawful by virtue of the Resale Prices Act 1976; or
16.3.3 is or was an abuse of a dominant position under the EEC Treaty.
16.4 Neither the Vendor nor the Company has at any time received, nor have
either of them any grounds for believing that either may receive, any process,
notice, communication or any formal or informal request for information with
reference to any actual or proposed agreement, arrangement, concerted practice,
trading policy or practice, course of conduct or activity of the Company from
the Director General of Fair Trading, the Monopolies and Mergers Commission,
the Secretary of State for Trade and Industry, the Commission of the European
Communities, the Restrictive Practices Court or from any other person or body
(wherever situated) whose task it is to investigate, report or decide upon
matters relating to monopolies, mergers or anti-competitive agreements or
practices nor has the Company or anything done or to be done or proposed to be
done by the Company been the subject of any report, decision, order, judgement
or injunction made, taken or obtained by any of such persons or bodies, nor has
the Company given or been the subject of any undertakings or assurances given
(directly or indirectly) to any such persons or bodies.
16.5 The Company has not been party to any agreement, practice or arrangement
which, in whole or in part, contravenes the provisions of the Trade
Descriptions Acts 1968 to 1972 or the Consumer Credit Act 1974.
<PAGE>
- 28 -
TRADING AND CONTRACTUAL ARRANGEMENTS
- ------------------------------------
17.1 The Company is not a party to:-
17.1.1 any partnership, joint venture, European Economic Interest Grouping
or consortium arrangement or agreement or any agreement for sharing
commissions or other income;
17.1.2 any agreement or arrangement which is liable to be terminated by
another party or under which rights of any person are liable to arise or be
affected as a result of any change in the control, management or
shareholders of the Company;
17.1.3 any contract of a long-term nature that is to say, unlikely to have
been fully performed, in accordance with its terms, more than twelve months
after the date on which it was entered into;
17.1.4 any agreement or arrangement of a loss making nature (that is to
say, now known to be likely to result in a loss on completion of
performance);
17.1.5 any agreement containing covenants limiting or excluding its right
to do business and/or to compete in any area or in any field or with any
person, firm or company;
17.1.6 any agreement or arrangement of an unusual or abnormal nature or
entered into otherwise than on an arm's length basis in the ordinary and
usual course of the Company's business;
17.1.7 any agreement or arrangement which cannot readily be fulfilled or
performed by the Company in accordance with its terms without undue or
unusual expenditure or effort;
17.1.8 so far as the Vendor is aware, any agreement or arrangement
suffering from any invalidity or in respect of which there are grounds for
determination, rescission, avoidance or repudiation by any other party; or
17.1.9 any agreement or arrangement which involves payment by reference to
fluctuations in the index of retail prices or any other index or in the
rate of exchange for any currency.
17.2 No offer, tender or the like given or made by the Company on or before the
date of this Agreement and still outstanding is capable of giving rise to a
contract merely by a unilateral act of another person which contract would be
otherwise than in the ordinary course of business or onerous, long term or
unusual.
TITLE DEEDS
- -----------
18. All documents which in any way affect the right, title or interest of the
Company in or to any of its property, undertakings or assets and all agreements
to which the Company is a party are in the possession of the Company and are
properly stamped.
<PAGE>
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POWERS OF ATTORNEY
- ------------------
19. The Company has not given a power of attorney and no person has any
authority (express, implied or ostensible) which is still outstanding or
effective to enter into any contract or commitment or to do anything on its
behalf other than any authority to employees to enter into routine trading
contracts in the normal course of their duties and to executive directors.
INSOLVENCY
- ----------
20.1 No receiver or administrative receiver has been appointed of the whole or
any part of the assets or undertaking of the Company.
20.2 No administration order has been made in relation to the Company and no
petition for such an order has been presented.
20.3 No proposal for a voluntary arrangement between the Company and its
creditors (or any class of them) has been made to or is in the contemplation of
the Company.
20.4 No petition has been presented, no order has been made and no resolution
has been passed for the winding-up of the Company.
20.5 The Company has not stopped payment to its creditors nor is it insolvent
or unable to pay its debts as and when they fall due.
20.6 No unsatisfied judgement is outstanding against the Company.
OFFICERS AND EMPLOYEES
- ----------------------
21.1 Those persons named as such in Schedule 2 are the only directors of the
Company and the secretary of the Company respectively and the particulars set
out in Schedule 2 are true and complete.
21.2 No person is or has been a shadow director of the Company.
21.3 The particulars shown in the schedule of employees annexed to the
Disclosure Letter list all the employees of the Company, are true and accurate
and show in relation to each employee (or, if appropriate, by category or grade
of employee) and officer:-
21.3.1 date of birth and period of continuous service;
21.3.2 job title or job function and work place location if not at
Westhaughton;
21.3.3 all entitlements to cash remuneration;
21.3.4 details of entitlements to all other benefits provided by the
Company (whether on a contractual or discretionary basis);
<PAGE>
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21.3.5 details of any share option, profit sharing, incentive and bonus
arrangements (whether or not such arrangements are legally binding on the
Company); and
21.3.6 details of all other terms and conditions of employment (other than
as implied by statute).
21.4 Details of any Company handbook or work rules relating to any employees of
the Company (including any disciplinary or grievance procedure) have been
provided to the Purchaser.
21.5 No change in the remuneration, benefits and arrangements shown in the
schedule of employees is due or expected within twelve months from the date of
this Agreement and no request for any such change has been received.
21.6 There are no recognition, procedural or other Trade Union agreements to
which the Company is a party or which apply to any of its employees together
with details of any works council, staff association or other body representing
any of the Company's employees and details of any elected employee
representatives (for whatever purpose).
21.7 There is not outstanding any contract of service between the Company and
any of its directors, officers or employees which is not terminable by the
Company without damages or compensation (other than any compensation payable by
statute) on three month's notice given at any time.
21.8 No current employee of the Company has given notice terminating his
contract of employment or is under notice of termination from the Company and
no person has been offered employment by the Company but not yet commenced such
employment.
21.9 There are no arrangements between the Company and any of its employees or
Directors, whether contractual or otherwise, in relation to change of
ownership, severance or other payments on termination of employment.
21.10 The Vendor has complied with all its obligations to, and no amount is due
to or in respect of, any current employee or person whose employment with the
Company has been terminated within the period of one year prior to Completion
("FORMER EMPLOYEE") arising out of or in connection with:
21.10.1 any of the terms and conditions of employment of the employees and
Former Employees;
21.10.2 all its obligations under statute and otherwise concerning the
health and safety at work of such current employees and Former Employees
and so far as the Vendor is aware there are no claims threatened or pending
by any employee, Former Employee or third party in respect of any accident
or injury which are not fully covered by insurance.
21.10.3 all other statutes and regulations relevant to the employment of
the employees and Former Employees with the Vendor; and
<PAGE>
- 31 -
21.10.4 all relevant orders and awards made in relation to the employees
and Former Employees.
21.11 There is no dispute between the Company and any current or former
employee or director trade union works council, staff association or other body
representing employees or any elected employee representatives pending or
threatened.
21.12 No employee is currently on long term sickness absence or maternity
leave.
21.13 No arrangements or adjustments have been made or are operated by the
Vendor by virtue of the provisions of the Disability Discrimination Act 1996 in
relation to any employee and the Vendor is not in breach of its obligations
under this Act.
21.14 The Company's Pension Scheme (named as the Bodycote Group Pension Scheme
in the Disclosure Letter) is exempt, approved or capable of exempt approval
within the meaning of section 592(1) ICTA 1988 and neither the Vendor nor the
Company is aware of any reason why such approval should be withdrawn.
INTELLECTUAL PROPERTY RIGHTS
- ----------------------------
22.1 There is no Intellectual Property owned by the Company or confidential
know-how relating to the business of the Company nor does the Company require
to use the Intellectual Property or confidential know-how of any third party.
22.2 So far as the Vendor is aware none of the processes, products or
activities of the business of the Company infringes any right of any other
person relating to Intellectual Property or involves the unlicensed use of
information confidential to any person or gives rise to a liability for any
royalty or similar payment.
22.3 The Company does not trade under any name other than its full corporate
name.
SUBSIDIARY UNDERTAKINGS
- -----------------------
23. The Company has no and has never had any subsidiaries or subsidiary
undertakings and has never had any legal or beneficial interest in the shares
of any other company and has not agreed to acquire any such shares.
PENSIONS
24.1 In this paragraph 24 the following terms have the following meanings:
The Bodycote Scheme: The Bodycote Group Pension Scheme
The Executive Plan: Supercraft (Garments) Limited Executive
Pension Plan.
The Life Insurance Scheme: Supercraft (Garments) Limited Group Life
Insurance Scheme.
together the Executive Plan and the Life
Insurance
<PAGE>
- 32 -
Scheme shall be referred to as the
Vendor's Scheme.
Relevant Benefits: as defined in section 612 of ICTA 1988
but with the omission of the exception
in that definition.
Relevant Person: each past and present employee, officer
and director of the Company and their
respective spouses and dependants.
Beneficiary: any person who, at the date of this
Agreement, is not a Relevant Person but
who is a beneficiary (present or
contingent) of the Vendor's Scheme.
24.2 The Company has made no agreement under which it is or may become legally
liable to provide Relevant Benefits for any Relevant Person or Beneficiary
under the Bodycote Scheme other than in respect of Allen Williamson, Jason Teal
and Graham Pearson and the Bodycote Scheme Explanatory Booklet effective from 1
April 1995 sets out the total Relevant Benefits that are payable in respect of
such individuals under that scheme.
24.3 Except under the Vendor's Scheme and except for the Company's commitment
to provide Relevant Benefits under paragraph 24.2 or as provided by statute, no
agreement exists for the provision of Relevant Benefits for any Relevant Person
or Beneficiary in connection with which the Company is or may become legally
liable to make any payment and the Company is not liable to make contributions
to a personal pension scheme in respect of any Relevant Person. No legally
binding undertaking has been given to any Relevant Person that the Relevant
Benefits under the Vendor's Scheme, or any other arrangement disclosed under
this paragraph 24.3, will be improved or further Relevant Benefits introduced.
24.4 The Disclosure Letter contains or has annexed to it all relevant documents
relating to the Vendor's Scheme. The documents disclosed are valid and
effectual as at the date of this Agreement and when taken together correctly
describe all the benefits which are being paid or are payable under the
Vendor's Scheme.
24.5 The Vendor's Scheme and the Bodycote Scheme are exempt approved schemes
(as defined in section 592 of ICTA 1988) and so far as the Vendor is aware
nothing has been done or omitted which will or is likely to result in them
ceasing to have exempt approved status. The Bodycote Scheme is a contracted-out
scheme (within the meaning given in section 7(3) of the Pension Schemes Act
1993) in relation to the employments of Allen Williamson, Jason Teal and Graham
Pearson and so, far as the Vendor is aware, nothing has been done or omitted
which will or may result in the Bodycote Scheme ceasing to have contracted-out
status in relation to the employment of these individuals.
24.6 So far as the Vendor is aware the Vendor's Scheme has at all times been
operated in accordance with the provisions governing it and in accordance with
all applicable laws and regulatory requirements and it has been properly
administered.
24.7 All amounts due to the Bodycote Scheme and the Vendor's Scheme from the
Company have been paid.
<PAGE>
- 33 -
24.8 So far as the Vendor is aware there are no actions, suits or claims
pending or threatened against the Company in respect of the provision of
Relevant Benefits and there are no circumstances which are likely to give rise
to any such action, suit or claim.
24.9 No individuals entitled to become members of the Vendor's Scheme in
accordance with their contracts of employment have been excluded from
membership by the Vendor or the Company.
24.10 The liability for all lump sum death in service benefits which may become
payable under the Vendor's Scheme or the Bodycote Scheme to or in respect of
any Relevant Person or Beneficiary is fully insured with a reputable insurance
Company and all premiums due to date have been paid.
25. NET ASSETS
The net assets of the Company as at Completion are not less than net assets as
shown in the Completion Accounts.
<PAGE>
- 34 -
SCHEDULE 5
----------
WARRANTIES RELATING TO TAXATION
- -------------------------------
1. GENERAL
- -----------
1.1 The Company has not carried out or been engaged in any transaction or
arrangement since the Accounts Date such that the law provides that there may
be substituted for the amount or value or the actual consideration given or
received (or to be given or received) by the Company any different amount or
value for taxation purposes.
1.2 There is set out in the Disclosure Letter with express reference to this
warranty full details of all clearances obtained in the last 6 years by or
relating to the Company pursuant to any statutory provision, statement of
practice relating to taxation or any press release issued by any taxation
authority. Any transaction for which any clearance was obtained has been
carried out only in accordance with the terms of the clearance given for that
transaction and the application upon which the clearance was based. So far as
the Vendor is aware nothing has arisen since any clearance was obtained which
would bring into question its validity.
1.3 Since the Accounts Date no accounting period of the Company has ended.
2. COMPLIANCE
- --------------
2.1 The Company has made all returns, claims for relief, applications,
notifications and computations (whether physically in existence or
electronically stored) ("Returns") it is required by law to make for the
purposes of taxation. All Returns have been properly and punctually submitted
(whether physically or electronically) by the Company to all relevant taxation
authorities (whether of the United Kingdom or elsewhere) and the Returns are
complete, true and accurate, give disclosure of all material facts and
circumstances and are not the subject of any question or dispute nor so far as
the Vendor is aware are likely to become the subject of any question or dispute
with any taxation authority.
2.2 The Company has filed a corporation tax return for the period ended on the
Accounts Date.
2.3 Since the Accounts Date, the Company has not filed any amended corporation
tax return.
2.4 The Company is not a party to any special arrangement for the making of
joint amended returns (as referred to in Inland Revenue Statement of Practice
10/93).
2.5 All payments by the Company to any person which ought to have been made
under deduction of taxation have been so made and the Company has (if required
by law to do so) accounted to the relevant taxation authority for the taxation
so deducted.
2.6 The Company is not liable as agent or lessee for any taxation liability of
another person.
<PAGE>
- 35 -
2.7 No taxation authority has agreed to operate any special arrangement (being
an arrangement which is not based on a strict and detailed application of the
relevant legislation, statements of practice or extra-statutory concessions
published in Inland Revenue guides) in relation to the Company's affairs.
2.8 The Company has complied with all notices served on it by any taxation
authority and no such notice remains outstanding.
2.9 The Company has duly and punctually paid all taxation which it has become
liable to pay.
2.10 The Company has not within the last 12 months paid or become liable to pay
any penalty, fine or surcharge in connection with taxation.
2.11 Since the Accounts Date there has been no debt outstanding to any member
of the Vendor's Group in respect of which the Company has been allowed (or it
is entitled to) a deduction in computing the profits or gains of a trade such
that if the debt were released, the amount released would be treated as a
receipt of the trade under section 94 ICTA 1988 (debts deducted and
subsequently released).
3. FOREIGN EXCHANGE AND FINANCIAL INSTRUMENTS
- ----------------------------------------------
3.1 The Company has never made any claims under Section 139 Finance Act 1993
(claim to defer unrealised gains) in respect of any foreign exchange gain.
3.2 The Company has never made any election to treat any qualifying assets or
qualifying liabilities as matched pursuant to the Exchange Gains and Losses
(Alternative Method of Calculation of Gain or Loss) Regulations 1994.
3.3 The Company has never made any election under the Local Currency Elections
Regulations 1994.
3.4 The Company has not since the Accounts Date entered into any qualifying
contract under Chapter II Part IV Finance Act 1994 (interest rate and currency
contracts) which remains outstanding.
3.5 Neither the Company nor the principal Company of any group of which the
Company is (or has ever been) a member has made any election under section 148
Finance Act 1994 (contracts which may become qualifying contracts).
4. DISTRIBUTIONS
- -----------------
4.1 The Company has not since the Accounts Date made or agreed to make any
distributions within the meaning of section 209 ICTA 1988 (meaning of
"distribution").
4.2 The Company has not been concerned in any exempt distribution within
sections 213 to 218 ICTA 1988 (demergers) within the period of five years
preceding Completion.
4.3 The Company has not issued any security which will be outstanding at
Completion in circumstances such that any interest or other payment payable in
respect of it or any
<PAGE>
- 36 -
part of any such interest or other payment constitutes a distribution under
section 209 ICTA 1988 (meaning of "distribution").
4.4 The Company has not in the six years prior to Completion made any repayment
of share capital to which section 210(1) ICTA 1988 (bonus issue following
repayment of share capital) might apply.
4.5 The Company has not in the six years prior to Completion issued any share
capital or securities as paid up other than by receipt of new consideration
within the meaning of section 254 ICTA 1988 (interpretation).
4.6 The Company has never made or revoked an election under section 246A ICTA
1988 (election by company paying dividend) that any dividend be a foreign
income dividend.
4.7 The Company has never treated itself as an international headquarters
company for the purposes of section 246T ICTA 1988 (liability to pay ACT
displaced).
5. CAPITAL ALLOWANCES
- ----------------------
5.1 The aggregate book value of each of the assets of the Company, on which an
entitlement to industrial building allowances or other allowances in respect of
capital expenditure has arisen under the Capital Allowances Act 1968 or the
Capital Allowances Act 1990, in or adopted for the purposes of the Accounts
does not exceed the aggregate residue of expenditure or written-down value
attributable to such assets for the purposes of those Acts and the aggregate
book value of plant and machinery allocated to a pool of plant and machinery on
which an entitlement to capital allowances has arisen under Part II Capital
Allowances Act 1990 (machinery and plant) does not exceed the written-down
value of the qualifying expenditure in respect of each such pool under that
Act.
5.2 All expenditure incurred by the Company or which it may incur under any
subsisting commitment for the provision of machinery or plant has qualified for
writing down allowances under Part II Capital Allowances Act 1990 (machinery
and plant) as a trading expense of a trade carried on by the Company.
5.3 Since the Accounts Date any claims for capital allowances which have been
made under the Capital Allowances Act 1990 have not been withdrawn, and no
available allowances have been disclaimed.
5.4 Since the Accounts Date the Company has not done any act as a result of
which:-
5.4.1 there may be made against the Company a balancing charge under the
Capital Allowances Act 1968 or under the Capital Allowances Act 1990; or
5.4.2 any disposal value may be brought into account under section 24
Capital Allowances Act 1990 (writing down allowances and balancing
adjustments); or
5.4.3 there may be any recovery of excess relief within sections 46 or 47
Capital Allowances Act 1990 (recovery of excess relief); or
<PAGE>
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5.4.4 a relevant event may occur within the meaning of section 138 Capital
Allowances Act 1990 (scientific research).
5.5 There is not, and so far as the Vendor is aware there are no circumstances
which could give rise to, any dispute between the Company and any other person
as to the entitlement to capital allowances under sections 51 to 59 Capital
Allowances Act 1990 (fixtures).
5.6 The Company has not made any election under section 37 Capital Allowances
Act 1990 (short life assets) nor has been taken to have made an election under
sub-section (8)(c) of that section.
5.7 The Company has no machinery or plant which falls within the definition of
a long life asset for the purposes of section 38A Capital Allowances Act 1990.
6. CAPITAL GAINS
- -----------------
6.1 The book value in or adopted for the purposes of the Accounts as the value
of each of the assets of the Company on the disposal of which a chargeable gain
or allowable loss could arise does not exceed the amount deductible under
section 38 Taxation of Chargeable Gains Act 1992 (acquisition and disposal
costs etc.) (excluding any indexation allowance) in respect of each such asset.
6.2 The Company neither has an interest in nor has issued any deep discount
security, deep gain security or qualifying convertible security as defined by
paragraph 1(1) of Schedule 4 ICTA 1988 (deep discount securities), paragraph 1
of Schedule 11, Finance Act 1989 (deep gain securities) or paragraph 2 of
Schedule 10, Finance Act 1990 (convertible securities) respectively.
6.3 No debt owed to the Company would on its disposal give rise to a chargeable
gain by reason of section 251 Taxation of Chargeable Gains Act 1992 (debts -
general provisions).
6.4 The Company does not have any interest in any qualifying corporate bond to
which section 116 Taxation of Chargeable Gains Act 1992 (reorganisations,
conversions and reconstructions) applies.
6.5 The Company does not have an interest in any assets which are wasting
assets within the meaning of section 44 Taxation of Chargeable Gains Act 1992
(meaning of "wasting asset") and which do not qualify for capital allowances.
6.6 The Company has not made any claim or election under either of section 24
Taxation of Chargeable Gains Act 1992 (disposals where assets lost or
destroyed, or become of negligible value) or section 161(3) Taxation of
Chargeable Gains Act 1992 (appropriations to and from stock). The Company has
not since the Accounts Date appropriated any asset forming part of its trading
stock for any other purpose.
6.7 The Company has not since the Accounts Date been a party to any
depreciatory transaction for the purpose of section 176 Taxation of Chargeable
Gains Act 1992 (depreciatory transactions in a group) or which could be treated
as a depreciatory transaction under section 177 Taxation of Chargeable Gains
Act 1992 (dividend stripping).
<PAGE>
- 38 -
6.8 The Company has not made nor is entitled to make any claim under section
280 Taxation of Chargeable Gains Act 1992 (consideration payable by
instalments) to pay by instalments taxation on chargeable gains.
6.9 No election has been made under section 35(5) Taxation of Chargeable Gains
Tax 1992 (assets held on 31 March 1982) in respect of any of the assets of the
Company.
7. GROUPS OF COMPANIES
- -----------------------
7.1 There is set out in the Disclosure Letter details of all surrenders,
claims, notices and agreements for surrenders or claims or the giving of
notices for:-
7.1.1 any amounts by way of group relief under the provisions of sections
402 to 413 ICTA 1988 (group relief); and
7.1.2 any amounts of advance corporation tax under the provisions of
section 240 ICTA 1988 (surplus ACT); and
7.1.3 any amounts of tax refund to be dealt with under the provisions of
section 102(2) Finance Act 1989 (company tax refund);
in each case where:-
7.1.4 any payment for group relief (within the meaning of section 402(6)
ICTA 1988) or for surrender of amounts of advance corporation tax (within
the meaning of section 240(8) ICTA 1988) or for a transferred tax refund
(within the meaning of section 102(7) Finance Act 1989) remains outstanding
or could be reduced or increased; or
7.1.5 the claim surrender or notice has yet to be agreed or determined by
the Inland Revenue for a specific amount.
7.2 All dividends and other payments referred to in section 247 ICTA 1988
(group income) which have been paid by the Company have been paid under an
election made under that section and all such elections are now and will up to
Completion remain valid and in force. The Company has not since the Accounts
Date made and will not up to Completion make or receive any payment of any
dividend in respect of which a notice under section 247(3) ICTA 1988 has
effect.
7.3 Since the Accounts Date the Company has not ceased to be a member of a
group of companies such that section 179 Taxation of Chargeable Gains Act 1992
(company ceasing to be member of group) has effect in relation to any asset or
property of the Company. Section 179 Taxation of Chargeable Gains Act 1992 will
not have effect in relation to any asset or property of the Company as a result
of this Agreement.
7.4 No tax-free benefit has ever been conferred either upon the Company or upon
any person connected with the Company within the meaning of section 30 Taxation
of Chargeable Gains Act 1992 (tax-free benefits).
7.6 None of the Company's assets and no relevant asset has been materially
reduced in
<PAGE>
- 39 -
value within the meaning of section 30 Taxation of Chargeable Gains Act 1992
(tax-free benefits).
8. VALUE ADDED TAX
- -------------------
8.1 The Company is a registered and taxable person for the purposes of the
Value Added Tax Act 1994 and has complied with and observed in all material
respects the terms of all statutory provisions, directions, conditions, notices
and agreements with H.M. Customs and Excise relating to value added tax. The
Company has maintained and obtained accounts, records, invoices and other
documents (as the case may be) requisite for the purposes of value added tax
which are complete, correct and up-to-date.
8.2 The Company:-
8.2.1 is not, nor in the two years prior to Completion has been, in arrears
with any payments or returns or notifications under any statutory
provisions, directions, conditions or notices relating to value added tax,
or liable to any forfeiture or penalty or interest or surcharge or to the
operation of any penalty, interest or surcharge provision;
8.2.2 has not been required by H.M. Customs and Excise to give security;
8.2.3 is not, and has not agreed to become, an agent, manager, factor or
VAT representative for the purposes of sections 47 or 48 Value Added Tax
Act 1994 (agents etc.) of any person who is not resident in the United
Kingdom;
8.2.4 has not made, and will not make prior to Completion, any supplies
that are exempt supplies or would be exempt supplies if supplied within the
United Kingdom; and
8.2.5 has not received a notice under paragraph 1 of Schedule 6 Value Added
Tax Act 1994 (valuation - special cases) directing that the value of goods
supplied by the Company be taken to be their open market value.
8.3 The Company has not since the Accounts Date been, and will not prior to
Completion be, treated as having made any supply of goods or services for the
purposes of value added tax where no supply has in fact been made by the
Company.
8.4 The Company is not approved for the purposes of the Customs Duties
(Deferred Payment) Regulations 1976 (deferral of duty on imports).
8.5 The Company has never in the two years prior to Completion received a
surcharge liability notice under section 59 Value Added Tax Act 1994 (default
surcharge) or a penalty liability notice under section 64 Value Added Tax Act
1994 (persistent misdeclarations).
8.6 The Company is not for the purposes of paragraph 5(5) of Schedule 10, Value
Added Tax Act 1994 (developers of certain non-residential buildings etc.) the
developer of any building or work in respect of which no election has been made
under paragraph 2(1) of that Schedule by the Company.
<PAGE>
- 40 -
8.7 There is set out in the Disclosure Letter the following details of each of
the assets of the Company to which Part XV of the Value Added Tax Regulations
1995 (adjustments to the deductions of input tax on capital items) applies:-
8.7.1 a description (including in the case of land or a building or part of
a building, the nature of the tenure and the time it has to run), the date
the first interval commenced and the input tax on the capital item; and
8.7.2 the proportion of input tax for which credit has been claimed
(whether provisionally or finally in a tax year and stating which).
8.8 There is set out in the Disclosure Letter details of any land, building and
civil engineering work in which the Company has an interest and to which any of
8.8.1 to 8.8.5 below apply:-
8.8.1 an election to waive exemption under paragraph 2(1) Schedule 10 Value
Added Tax 1994 has been made in respect of the land, building or work
including the dates such elections were made and whether any elections can
be withdrawn pursuant to paragraph 3(5)(a)(i) Schedule 10 Value Added Tax
Act 1994;
8.8.2 the land, building or work is intended for use as a dwelling, or for
a relevant residential purpose or for a relevant charitable purpose;
8.8.3 the property is a freehold building or freehold civil engineering
work that was completed for Value Added Tax purposes less than three years
prior to the date of this Agreement;
8.8.4 the property is a building or work subject to a development or
tenancy, developmental lease or developmental licence; and
8.8.5 the property is a freehold building or freehold civil engineering
work that has not been completed for value added tax purposes.
8.9 The Company is not required to pay amounts on account of value added tax
under any order made under section 28 Value Added Tax Act 1994 (payments on
account).
8.10 There is set out in the Disclosure Letter details of any agreement or
arrangement regarding group registration for VAT which the Company has entered
into.
9. CLOSE COMPANIES
- -------------------
9.1 The Company is not and has never been, within the six years prior to
Completion, a close company within the meaning of section 414 ICTA 1988 (close
companies).
10. EMPLOYEES
- --------------
10.1 The Company has complied with sections 203 to 203L Income and Corporation
Taxes Act 1988 (pay as you earn) and the regulations made thereunder in respect
of all payments within the meaning of those sections and with the Social
Security (Contributions) Regulations 1979 in respect of all earnings which are
subject to those
<PAGE>
- 41 -
regulations.
10.2 The expense incurred under the existing arrangements for remunerating
officers and employees and rewarding persons rendering services to the Company
is deductible for the purposes of section 74 or 75 ICTA 1988 (deductions).
10.3 The Company does not operate any scheme approved under section 202 ICTA
1988 (charities: payroll deduction scheme) or registered under Chapter III of
Part V ICTA 1988 (profit-related pay).
10.4 No officer or employee of the Company participates in any scheme approved
under Schedule 9 ICTA 1988 (approved share option and profit sharing schemes)
or is a beneficiary or potential beneficiary of a qualifying employee share
ownership trust as defined in Schedule 5 Finance Act 1989 (employee share
ownership trusts).
10.5 Since the Accounts Date the Company has not received any payment to which
sections 601 to 603 ICTA 1988 apply (pension scheme surpluses: payments to
employers).
10.6 Rights to acquire shares pursuant to a right conferred on a person or
opportunity offered to that person by reason of his office of employment with
the Company or any other company have not been granted to a person by the
Company or any other person, and the Company has not issued shares to which
Part III, Chapter II Finance Act 1988 (Unapproved Employee Share Schemes)
applies.
10.7 No remuneration for or in respect of the services of a director or an
employee has been paid to any person other than the director or employee.
11. STAMP DUTIES
- -----------------
11.1 There is no instrument which is within the possession of or under the
control of the Company and which is necessary to establish the Company's title
to any right or asset which is liable to stamp duty but which has not been duly
stamped or which would attract stamp duty if brought within the relevant
jurisdiction.
11.2 The Company has complied in all respects with the provisions of Part IV,
Finance Act 1986 (stamp duty reserve tax) and with any regulations made under
the same and the Company is not and will not become liable to pay stamp duty
reserve tax by reference to any agreement which falls within the terms of
section 87(1) of that Act and is entered into after the Accounts Date and prior
to Completion.
12. INTERNATIONAL
- ------------------
12.1 The Company is and always has been resident only in the United Kingdom for
taxation purposes. The Company is not liable to taxation in any jurisdiction
other than the United Kingdom.
12.2 The Company has not, without the prior consent of the Treasury, entered
into any of the transactions specified in section 765 ICTA 1988 (migration etc.
of companies).
<PAGE>
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12.3 The Company is not the branch, agency or UK representative of a person who
is not resident in the United Kingdom.
12.4 The Company does not receive any income to which sections 61-66 Finance
Act 1993 (interest etc. on debts between associated companies) apply.
12.5 The Company does not have any interest in any controlled foreign company
or in any off-shore fund as defined respectively in Chapters IV and V of Part
XVII of ICTA 1988 (tax avoidance).
12.6 The Company does not have any interest in any company which is not
resident in the United Kingdom which would be a close company if it were
resident in the United Kingdom (section 13 Taxation of Chargeable Gains Act
1992 - attribution of gains to members of non-resident companies).
<PAGE>
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SCHEDULE 6
----------
PROPERTIES
- ----------
Part I
DETAILS OF THE PROPERTY
- -----------------------
FREEHOLD PROPERTIES
The freehold land known as Industrial Mill, Bolton Road, Westhaughton which is
for the purposes of identification shown edged red on the plan annexed to
Schedule 11 hereof.
PART II
- -------
WARRANTIES RELATING TO THE PROPERTIES
- -------------------------------------
1. The Company has not received notice of any outstanding monetary claims or
liabilities contingent or otherwise in respect of the Property.
2. The Company has not received any notice which remains outstanding in respect
of the Property from a competent authority that the requirements of the
Factories Act 1961,the Offices Shops and Railway Premises Act 1963, the Health
and Safety at Work Act 1974, the Fire Precautions Act 1971 and any other
applicable and/or relevant statute law and/or orders directions or regulations
of any competent authority have been breached.
3. There have been no disputes of which the Vendor is aware concerning
boundaries, easements, covenants, rights, means of access or other matters
relating to the Property.
4. The Company is not actually or contingently liable as surety or as an
originating contracting party to, or assignor or assignee of, any lease or
property other than the Property.
5. The Property is not subject to any lease, tenancy, licence or other right of
occupation and/or enjoyment (nor is there any agreement to grant the same).
6. There is no person in possession or occupation of the Property (save for the
Company) and so far as the Vendor is aware no person has or claims any rights
(including security of tenure rights) or easements of any kind in respect of
the Property adverse to the estate, interest, right or title of the Company.
7. So far as the Vendor is aware there are no rights, easements, liberties,
privileges, advantages, interests, covenants, conditions, restrictions,
agreements or declarations or any outstanding notices (whether given by a
lessor, local authority or any other person, body, authority or company) or
otherwise known to the Company which adversely affect the title or the value of
the Property or conflict with the present user of the Property and the
continuance of such use, or restrict access thereto and/or which are of an
unusual or
<PAGE>
- 44 -
unduly onerous nature.
8. All development carried out on the Property has been carried out in
accordance with the Town and Country Planning legislation and any orders,
rules, regulations, consents or permissions required to be made or given
thereunder have been obtained and any consents and permissions are subject only
to conditions which have been satisfied in all material respects.
9. So far as the Vendor is aware there are no matters or things that adversely
affect or might adversely affect either the Company's title to the Property
that should be brought to the attention of the Purchaser.
10. The replies of Eversheds to the preliminary enquiries in respect of the
Property raised by Travers Smith Braithwaite are true, accurate and complete in
all material respects.
11. No notice purporting to exercise the option conferred on Glen Hamilton
pursuant to the terms of an Option Agreement ("the Agreement") dated 31.5.1994
between Taylor & Hartley Group Limited (1) and Glen Hamilton (2) has been
served and Taylor & Hartley Group Limited have accounted to the Company in
respect of all payments made by Glen Hamilton pursuant to the Agreement.
<PAGE>
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SCHEDULE 7
----------
WARRANTIES RELATING TO ENVIRONMENTAL MATTERS
- --------------------------------------------
1. No Environmental Claim has been made against the Company nor so far as the
Vendor is aware (without enquiry of any authorities) is such a Claim pending or
threatened and so far as the Vendor is actually aware (without having made
enquiries of any third parties) there are no circumstances likely to give rise
to an Environmental Claim.
2. The Company has at all times complied in all material respects with all
Environmental Laws relating to the use of the Property and the conduct of the
business of the Company.
3. There has been no spill, leakage, emission, discharge, escape or deposit
into, on, or from the Property to land, air or water (including ground water)
in any case arising from the Company's activities and, so far as the Vendor is
aware, there has been no other such spill, leakage, emission, discharge, escape
or deposit into, on, or from the Property howsoever arising, which in either
case may under Environmental Laws give rise to any third party or clean-up
liability.
DEFINITIONS
Environmental Claim means any claim, notice of violation,
prosecution, demand, action, official warning,
abatement or other order or notice relating to any
Environmental Matter and any notification or order
requiring compliance with Environmental Law;
Environmental Law means all statutes subordinate legislation, common
law and other local laws which relate to Environmental
Matters in force at the date of this Agreement
including the Environment Act 1995 and all guidance and
regulations thereunder; and
Environmental Matters means all matters relating to pollution or
human health or the environment by reason of waste,
discharges, emissions and releases to land, air and
water, nuisance and the manufacture, use, treatment,
storage, transport or disposal of chemicals, wastes,
forms of energy, radioactive substances or other
polluting, dangerous, hazardous or toxic substances.
Property means that property details of which are set out in
Part I of Schedule 6.
<PAGE>
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SCHEDULE 8
----------
EARN OUT
- --------
1. The following words and expressions where used in this schedule have the
meanings given to them below:-
1997 Accounts the audited profit and loss account of the Company for
the financial year ending 31 December 1997 prepared on
the basis set out in this clause;
1997 Profit the profit, as shown by the 1997 Accounts, on ordinary
activities before taxation, interest (both income and
expense) and extraordinary items of the Company for the
year ending 31st December 1997.
2. The Deferred Consideration (if any) shall be calculated as follows:-
2.1 if 1997 Adjusted Profit is less than or equal to (pound)350,000 then the
amount of Deferred Consideration shall be nil;
2.2 if 1997 Adjusted Profit is greater than or equal to (pound)400,000 then the
amount of Deferred Consideration shall be (pound)250,000; and
2.3 if 1997 Adjusted Profit is greater than (pound)350,000 but less than
(pound)400,000 then the amount of Deferred Consideration shall be (1997
Adjusted Profit less (pound)350,000) multiplied by 5.
3. The Purchaser shall pay the Deferred Consideration (if any) in cash to the
Vendor within 30 Business Days of the date after acceptance by the Vendor,
deemed acceptance or determination (as the case may be) of the Deferred
Consideration in accordance with this Schedule.
4. The 1997 Accounts shall be prepared in accordance with the accounting
policies, principles and practices applied in the preparation of the Accounts
to the extent that the same comply with UK GAAP.
5. The Purchaser shall instruct the Purchaser's Accountants to audit the 1997
Accounts as soon as practicable after the end of that financial period and then
promptly following the preparation thereof to deliver adjust the figure for
profit on ordinary activities before taxation, interest (both income and
expenses) (for the avoidance of doubt interest accrued on the Retention Account
is not to be included as an expense in the calculation of the 1997 Adjusted
Profit) and extraordinary items by the matters referred to in clauses 6 and 12
below and by discounting the effect on that figure of the direct costs and
allocated revenue resulting from the carrying out of the orders placed with the
Company during the period from Completion to 31 December 1997 by Guarantor
Group Companies (save for the Company) ("THE 1997 ADJUSTED PROFIT") and to
deliver to the Vendor a copy of the 1997 Accounts together with a certificate
as to the 1997 Adjusted Profit ("1997 CERTIFICATE"), which certificate shall
confirm that the 1997 Adjusted Profit has been calculated in accordance with
this Schedule.
<PAGE>
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6. For the purposes of calculating the 1997 Adjusted Profit, if any assets held
at 31 December 1996 and at Completion are written down (other than by reason of
depreciation at the rates specified in the Accounts) in the Completion Accounts
below the value of those assets in the Accounts, then it shall be the values in
the Completion Accounts which shall be substituted for the values of those
assets in the Accounts.
7. The Vendor and the Purchaser undertakes to provide promptly to the
Purchaser's Accountants, and render or cause the provision and rendering to the
Purchaser's Accountants of, such information and assistance as the Purchaser's
Accountants may reasonably require.
8. Subject to the Vendor and the Vendor's Accountants signing a waiver letter
in the agreed form the Purchaser's Accountants shall provide all reasonable
access to the Vendor's Accountants in respect of their working papers so that
the Vendor may consider whether they agree to the calculation of the 1997
Adjusted Profit.
9. If the Vendor fails to notify the Purchaser in writing within 20 Business
Days of the date of the 1997 Certificate that it accepts the calculation of the
1997 Adjusted Profit as complying with the provisions of this Schedule, the
Vendor shall be deemed to have accepted such calculation of the 1997 Adjusted
Profit which shall then apply for all purposes of this Agreement.
10. If the Vendor notifies the Purchaser in writing within 20 Business Days of
the date of the 1997 Certificate that it does not accept the 1997 Adjusted
Profit as complying with the provisions of this Schedule ("NON-ACCEPTANCE
NOTICE") (giving with such notice or as soon as practicable thereafter
reasonable details of the reasons for non-acceptance and the items which are
contested), the Vendor and Purchaser shall meet to try to agree any differences
and if such agreement is reached within 10 Business Days of the date of the
Non-acceptance Notice then the figure representing the 1997 Adjusted Profit
shall be adjusted to reflect such agreement and the adjusted figure shall be
deemed to be the 1997 Adjusted Profit for all purposes of this Agreement.
11. In the event that the disagreement between the Purchaser and the Vendor
cannot be resolved within the time referred to in paragraph 10, such
disagreement may be referred to and the calculation of the 1997 Adjusted Profit
shall be conclusively determined (in the absence of manifest error) by an
independent firm of chartered accountants agreed by the Vendor and Purchaser
or, in the event of failure to agree upon such a firm within five Business Days
of the first party putting forward its proposed appointee, by an independent
firm of chartered accountants appointed by the President for the time being of
the Institute of Chartered Accountants in England and Wales on the application
of either the Purchaser or the Vendor. Such independent firm of chartered
accountants shall be instructed to determine the 1997 Adjusted Profit as soon
as is practicable and in any event within 30 Business Days of receiving such
instruction. The 1997 Adjusted Profit certified by such independent firm shall
then apply for all purposes of this Agreement. The fees of any such firm of
independent chartered accountants shall be borne as they shall direct or in
default of any such direction shall be borne as to 50 per cent. by the
Purchaser and 50 per cent. by the Vendor. Any firm appointed pursuant to the
provisions of this Schedule shall act as experts and not as arbitrators.
<PAGE>
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12 The 1997 Adjusted Profit shall be adjusted so far as necessary to take
account of the following matters:-
12.1 any profit or loss on the disposal of any fixed assets (including, without
limitation, any Intellectual Property or any interest in the Property and the
Oldham Property) shall be excluded;
12.2 the effects, including any increases or decreases in depreciation charges,
of any revaluation of any fixed assets (save that the Property shall be valued
at (pound)536,500 as at 31 December 1996 and the rates of depreciation used in
the Accounts applied thereto) as at 31 December 1997;
12.3 any management, administration or like charge made by the Purchaser shall
not be deducted and in this clause 12 only "Purchaser" shall where the context
permits be deemed to include any holding company from time to time of the
Purchaser and/or any subsidiary (other than the Company or any other Group
Member) from time to time of the Purchaser or of any such holding company;
12.4 any costs or expenses incurred in complying with any financial reporting
or other similar requirements of the Purchaser to the extent such reporting or
other similar requirements are more onerous than those to which the Company any
presently adheres shall not be deducted;
12.5 any sums paid to external accountants in respect of audit services
provided to the Company which are in excess of that charged in the Accounts
(exclusive of Value Added Tax) per annum shall not be deducted;
12.6 the fees, remuneration and pension contributions of any director or
officer of the Company nominated by the Purchaser (save where such nomination
is effected to replace any of Allen Williamson, Jason Teal or Graham Pearson)
shall not be deducted;
12.7 any compensation or other payment for loss of office or employment to any
director or senior employee of the Company shall not be deducted;
12.8 in respect of any transaction between the Purchaser and the Company which
is not at arm's length, there shall be substituted terms which are at arm's
length;
12.9 any sums paid by the Vendor under its obligations to indemnify the
Purchaser and/or Company pursuant to Schedule 11 shall not be deducted.
13. If there shall occur any material adverse change voluntarily made by the
Company to the existing business operations of the Company; or
13.1 the sale or other disposal of the whole or any substantial part of the
Company's undertaking or assets;
13.2 an order being made for the winding-up of the Company or the passing of
any resolution for its winding up unless in the reasonable opinion of the
directors of the Purchaser the Company is insolvent and such action is
necessary to ensure that all directors of the Company comply with their
obligations under the Insolvency Act 1986;
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13.3 the appointment of a receiver or receiver and manager or administrator
over the whole or any part of its assets or undertakings but subject to the
requirements and duties of any director under the provisions of the Insolvency
Act 1986;
13.4 save for any transfer, allotment or issue of any shares, or the grant of
any option or right to subscribe for shares to any Guarantor's Group company
the transfer or other disposal of the legal or any other interest in the whole
or any part of its issued share capital (apart from a nominee shareholding), or
the allotment or issue of any shares, or the grant of any option or right to
subscribe for shares, or any other alteration or reorganisation in respect of
its share capital;
Then the whole or the Deferred Consideration shall become immediately payable
regardless of the 1997 Adjusted Profits.
<PAGE>
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SCHEDULE 9
----------
COMPLETION ACCOUNTS PRINCIPLES
- ------------------------------
1. The Completion Accounts shall be prepared on a basis consistent with the
Accounts using the same accounting principles, policies and practices, but
subject to the same complying with the law and UK GAAP.
2. The following specific accounting policies will be applied in preparation of
the Completion Accounts:-
2.1 No value will be attributed in the Completion Accounts to intangible
fixed assets.
2.2 The provision in the Completion Accounts for Taxation shall be
calculated on the assumption that an accounting period ended on the
Completion Date and incorporate full provisions for all corporation tax,
advance corporation tax, deferred tax as previously calculated and income
tax liabilities of the company (including for the avoidance of doubt all
corporation tax in respect of profits arising since the Accounts Date)
other than Excluded Tax.
2.3 Save as provided in paragraphs 4(b) and (c) below tangible fixed assets
will be stated in the Completion Accounts at the value placed thereon in
the Accounts, net of depreciation charged since the Accounts Date at the
rates specified in the Accounts time apportioned up to the Accounts Date,
and will take account of additions and disposals since the Accounts Date
(tangible fixed assets acquired during the period in question being stated
in the balance sheet at a figure no greater than cost).
2.4 All stocks and work in progress will be stated at a value in accordance
with the valuation methods used in the Accounts.
2.5 The Vendor's and Purchaser's Accountants shall agree the scope and
materiality limits to be observed in the preparation of the Completion
Accounts.
3. Individual items of ancillary equipment or a group of such items bought to
function together (where such items cannot be used in isolation of one another)
acquired since the Accounts Date exceeding (individually or as a group) a cost
of (pound)1,000 shall be capitalised as fixed assets and depreciated
accordingly.
4. The calculation of net assets shall be before the payment of the
(pound)400,000 interim dividend made on 25th March 1997.
5. The calculation of net assets shall take into account:-
(a) the repayment of the inter-group non-trading loan with the Vendor of
(pound)232,985;
(b) the payment by the Company of a dividend of (pound)150,000 under group
<PAGE>
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election for the year ended 31 December 1996;
(c) the payment by the Company of a dividend of (pound)64,550 under group
election for the year ended 31 December 1995; and
(d) inclusion of the real property and buildings owned by the Company at
Bolton Road, Westhoughton at a value of (pound)536,500.
<PAGE>
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SCHEDULE 10
-----------
LIMITATION OF LIABILITY
- -----------------------
1. In this Schedule "Claim" means any claim which would (but for the provisions
of this Schedule) be capable of being made against the vendor in respect of any
liability for breach of the representations or warranties given under Schedules
4, 5, 6 and 7 of this Agreement.
2. Notwithstanding the provisions of this Agreement:-
2.1 the aggregate liability of the Vendor in respect of all Claims and claims
under the Tax Deed shall be limited to the (pound)2,944,535 (such limitation to
be decreased to (pound)2,408,035 on return of the Retention to the Purchaser
under Schedule 11).
2.2 the Vendor will be under no liability in respect of any claim unless the
amount of its liability in respect of such claim is (when aggregated with its
liability in respect of any other claim or claims made by the Purchaser) in
excess of (pound)20,000 in which event the Vendor will (subject to the other
provisions of this paragraph 2) be liable for the whole amount of such
liability and not merely the excess.
2.3 the Vendor will have no liability in respect of any Claim:-
2.3.1 to the extent that it arises or is increased as a result only of any
change in the law occurring after Completion or an increase in rates of
taxation after the Accounts Date or any provision or reserve in the
Accounts being insufficient by reason of any increase in the rates of
taxation after the Completion Date.
2.3.2 if it would not have arisen but for anything voluntarily done or
deliberately omitted to be done after Completion by the Purchaser or the
Company or any of their respective agents or successors in title outside
the ordinary course of business and which the Purchaser is not obliged to
do pursuant to a contractual or legal commitment incurred by the Company
prior to Completion, and which voluntary act or deliberate act or
deliberate omission could reasonably have been avoided and which the
relevant person carrying out the act ought reasonably to have been aware
would give rise to the liability giving rise to the Claim and for this
purpose he shall be deemed to have full knowledge of this Agreement;
2.3.3 to the extent that:-
2.3.3.1 provision or reserve (other than provision or reserve for
deferred taxation) specifically in respect of the liability giving
rise to the claim was made in the Accounts or Completion Accounts; or
2.3.3.2 any liability for taxation arising in the ordinary course of
business which term, for the avoidance of doubt, shall not include the
occurrences listed at clause 2.2 of the Tax Deed, of the Company after
the Accounts Date;
2.3.4 to the extent that it arises as a result of any change in the
accounting policy
<PAGE>
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or practice or in the accounting reference date of the Company after
Completion;
2.3.5 to the extent that the amount of the Claim corresponds to an increase
in the value of the assets of the Purchaser or the Company resulting from
the reduction in its liability to taxation.
2.4 Where the Purchaser or the Company is entitled to recover from some other
person any sum in respect of any matter or event which has or could give rise
to a Claim, the Purchaser will (or will procure that the Company will) take all
reasonable steps to recover that sum, and any sum recovered will reduce the
amount of such Claim or in the event of the recovery being delayed until after
such Claim has been satisfied by the Vendor, the lesser of the amount recovered
from the third party (less any costs and expenses of the Company or Purchaser
incurred in connection with that recovery and any taxation thereon) and the
amount paid by the Vendor to the Purchaser pursuant to the Claim, shall be
refunded by the Purchaser to the Vendor.
3. Upon the Purchaser becoming aware that matters have arisen which give rise
to a Claim, the Purchaser will:-
3.1 as soon as is reasonably practicable notify the Vendor in writing of the
potential Claim and of the matters which give rise to such Claim but, so that
the giving of such notice shall not be a condition precedent to the liability
of the Vendor and further that there shall be no such obligation on the
Purchaser if the matters likely to give rise to the Claim have come to the
attention of the Vendor.
3.2 So far as the Claim arises as a result of or in connection with a liability
to or a dispute with a third party, not to make any admission of liability,
agreement or compromise with any person, body or authority in relation to the
Claim without prior consultation with the Vendor.
3.3 Provided that it is indemnified to its satisfaction by the Vendor against
all costs expenses, liabilities, penalties and fees which may be incurred by
the Purchaser, or any Purchaser Group Company take such lawful action as the
Vendor may reasonably require to avoid, resist, contest or compromise the Claim
provided further that such action is not, or will not be, in the reasonable
opinion of the Purchaser, materially detrimental to the interests of any
Purchaser Group Company.
4. Nothing herein shall in any way diminish the Purchaser's or the Company's
common law duty to mitigate its loss.
5. If any potential Claim shall arise by reason of a liability of the Company
which is contingent only, then the Vendor shall not be under any obligation to
make any payment in respect of such Claim until such time as the contingent
liability ceases to be contingent and becomes actual.
6. The Purchaser confirms to the Vendor that it is not aware at the date of
this Agreement, after discussion with its accountants and solicitors, of any
matter or thing which in its reasonable opinion will or may give rise to any
Claim.
7. The Vendor will not be liable for any Claim to the extent that the Claim is
provided for
<PAGE>
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in determining the Deferred Consideration and where the 1997 Adjusted Profit is
or would (but for any provision, reserve or other charge in respect of such
subject matter) have been greater than (pound)350,000.
8. The provisions of this Schedule apply notwithstanding any other provision of
this Agreement or its Schedules or the Taxation Deed to the contrary and will
not cease to have effect in consequence of any rescission or termination by the
Purchaser of any other provisions of this Agreement.
<PAGE>
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SCHEDULE 11
-----------
RETENTION
- ---------
In this Schedule 11 the following definitions shall apply:-
PERFECTED TITLE ABSOLUTE title absolute free from any financial charge or
encumbrance or any restriction, stipulation or
covenant which would or might prevent or impede
the carrying on of the business of the Company
(other than any restriction, stipulation or
covenant specifically disclosed in the Disclosure
Letter);
IMPERFECT TITLE ABSOLUTE title absolute free from any financial charge or
encumbrance but subject to any restriction,
stipulation or covenant which would or might
prevent or impede the carrying on of the business
of the Company (other than any restriction,
stipulation or covenant specifically disclosed in
the Disclosure Letter);
PERFECTED LESSER TITLE lesser title than absolute free from any financial
charge or encumbrance or any restriction,
stipulation or covenant which would or might
prevent or impede the carrying on of the business
of the Company (other than any restriction,
stipulation or covenant specifically disclosed in
the Disclosure Letter);
IMPERFECT LESSER TITLE lesser title than absolute free from any financial
charge or encumbrance but subject to a
restriction, stipulation or covenant which would
or might prevent or impede the carrying on of the
business of the Company (other than any
restriction, stipulation or covenant specifically
disclosed in the Disclosure Letter).
1. The Retention shall on Completion be paid into an account opened in the
name of the Purchaser's and Vendor's Solicitors as stakeholder with
National Westminster Bank plc, City of London Office, PO Box 12258, 1
Princess Street, London EC2R 8PA and operated by a joint signature mandate
("the Retention Account").
2. 2.1 The Vendor at its expense agrees to use all reasonable endeavours to
procure the registration of the Company as registered proprietor of
the Property at H M Land Registry with Perfected Title Absolute
including if necessary to do so commencing proceedings to vest the
Property in the Company pursuant to Sections 44(2)(c) and 51(1)(ii)(c)
of the Trustees Act 1925 or as otherwise proposed by the Vendor and
approved by the Purchaser such approval not to be unreasonably
withheld.
2.2 The Purchaser further agrees to take all reasonable steps necessary
and to provide all reasonable assistance regarding the vesting of the
Property in the Company and effecting such registration including
procuring the execution
<PAGE>
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of documents necessary for such vesting and registration.
2.3 The Purchaser agrees that the Company, and if necessary the Purchaser,
shall be a party to any proceedings necessary to achieve the vesting
of the Property in the Company and in respect of any such proceedings
to which the Company (or the Purchaser as the case may be) is a party
the Purchaser agrees that it will irrevocably and unconditionally
appoint the Vendors' Solicitors, Messrs. Eversheds of 24 Mount Street,
Manchester M2 3DB (subject to acceptance of those instructions by
Eversheds) to act on its behalf and for the avoidance of doubt such
proceedings shall include any appeal or further applications that
shall be reasonably necessary to achieve the vesting of the Property
in the Company. For the avoidance of doubt, if Eversheds do not accept
instructions from the Purchaser in relation to the above matters then
the Purchaser may instruct such other persons as, in its sole
discretion, it deems necessary.
2.4 The Vendor shall indemnify, and keep indemnified the Purchaser (for
itself and as trustee for the Company) from and against:-
2.4.1 any liability (or any increase in any liability) to taxation
arising pursuant to Part II or Part XVII of ICTA 1988 or Part VI of
the Taxation of Chargeable Gains Act 1992 or in respect of any stamp
duty arising solely as a result of the vesting of the legal estate in
the Property in the Company, the registration of the Company as
proprietor of the Property, the transfer of the estate right and
interest (if any) of the Company in the Property pursuant to paragraph
6 of this Schedule and/or any subsequent lease back by the Vendor to
the Company of the Property upon the terms of paragraph 6.2 of this
Schedule.
2.4.2 all costs and expenses, incurred by the Purchaser or Company in
relation to the registration of the Company as proprietor of the
Property, in reviewing the terms of any restrictive covenant indemnity
policy or the Statutory Declaration and in complying with the
Company's obligation to transfer its interest in the Property to the
Vendor pursuant to paragraph 6 below.
2.5 Notwithstanding the provisions of this clause there shall be no
obligation on the Vendor to take any steps to restore Taylor & Hartley
Group Limited ("THG") to the Register of Companies and the obligation
of the Vendor pursuant to this Schedule to commence proceedings shall
be limited to any other proceedings which would have a reasonable
prospect of success in achieving the vesting of a legal estate in the
Property of the Company.
2.6 The Purchaser shall not and shall procure that the Company shall not
take any steps to return THG to the Register of Companies and if it
shall be in breach of this Clause the Purchaser shall indemnify the
Vendor against all losses (including liability to Taxation) together
with reasonable and proper costs that it may incur by reason of such
breach.
2.7 The Vendor shall continue (after the issue of any such proceedings or
the
<PAGE>
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making of any such application) to advise the Purchaser on a regular
basis of any developments in relation thereto.
3. If, at any time prior to the expiration of the Further Registration Period
(as defined below):-
3.1 the Purchaser's Solicitors are provided with office copy entries and
filed plan which show the Company to be the registered proprietor of
all of the Property at H M Land Registry with Perfected Title
Absolute;
3.2 the Purchaser's Solicitors are provided with:-
3.2.1 office copy entries and filed plan which show the Company to be
a registered proprietor of all of the Property at H M Land
Registry with Imperfect Title Absolute; and
3.2.2 a restrictive covenant indemnity policy in favour of the
Company to the amount of (pound)536,500 and otherwise in a form
reasonably satisfactory to the Purchaser effected with Norwich
Union or other reputable insurer; or
3.3 the Purchaser's Solicitors are provided with:-
3.3.1 office copy entries and filed plan which show the Company to be
the registered proprietor of all of the Property (save for the
roadway coloured brown on the plan annexed to this Schedule
("the Roadway")) with Perfected Title Absolute ; and
3.3.2 a Statutory Declaration in a form approved by the Purchaser
(such approval not to be unreasonably withheld) showing the
Company to have a prescriptive right of access to and egress
from the Property (excluding the Roadway) over the Roadway on
foot only or with vehicles of any description at any time of
the day or night for all purposes ("the Statutory
Declaration"); or
3.4 the Purchaser's Solicitor's are provided with:-
3.4.1 office copy entries and filed plan which show the Company to be
the registered proprietor of all the Property (save for the
Roadway) with an Imperfect Title Absolute at H M Land Registry;
3.4.2 a restrictive covenant insurance policy in favour of the
Company to the sum of (pound)536,500 in a form reasonably
satisfactory to the Purchaser effected with Norwich Union or
other reputable insurer; and
3.4.3 the Statutory Declaration; or
3.5 the Purchaser's Solicitor's are provided with office copy entries and
filed plan which show the Company to be the registered proprietor of
all of the
<PAGE>
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Property at H M Land Registry with a Perfected Lesser Title; or
3.6 the Purchaser's Solicitor's are provided with:-
3.6.1 office copy entries and filed plan which show the Company to be
the registered proprietor of all the Property at H M Land
Registry with an Imperfect Lesser Title; and
3.6.2 a restrictive covenant indemnity policy in favour of the
Company to the amount of (pound)536,500 in a form reasonably
satisfactory to the Purchaser effected with Norwich Union or
other reputable insurer; or
3.7 the Purchaser's Solicitor's are provided with:-
3.7.1 office copy entries and filed plan which show the Company to be
the registered proprietor of all the Property (save for the
Roadway) with a Perfected Lesser Title; and
3.7.2 the Statutory Declaration; or
3.8 the Purchaser's Solicitor's are provided with:-
3.8.1 office copy entries and filed plan which show the Company to be
the registered proprietor of all the Property (save for the
Roadway) with Imperfect Lesser Title at H M Land Registry;
3.8.2 a restrictive covenant indemnity policy in favour of the
Company to the sum of (pound)536,500 in a form reasonably
satisfactory to the Purchaser effected with Norwich Union or
other reputable insurer; and
3.8.3 the Statutory Declaration,
then for the purposes of this Schedule immediately upon the provision to
the Purchaser's Solicitors of such relevant document or documents referred
to in this Clause 3 completion of registration shall be deemed to have
occurred ("Completion of Registration").
4 4.1 The Vendor shall be entitled to receive the amount standing to the
credit of the Retention Account (less any Reduction in Value (as
defined below)), plus any accrued interest, within 3 days after the
date upon which either Completion of Registration or the agreement or
determination of the Reduction in Value (if any), whichever is the
later, occurs. Where any of paragraphs 3.5 to 3.8 apply the capital
payable to the Vendor out of the Retention Account shall be reduced by
the Reduction in Value (determined pursuant to paragraph 4.3) and the
balance paid to the Purchaser without interest.
4.2 Interest arising on the Retention Account shall be paid to the Vendor
on the usual quarter days or the earlier closing of the Retention
Account, so long
<PAGE>
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as the Vendor procures that the Vendor's Solicitors shall sign the
relevant bank instructions to release such sums.
4.3 If any part of the Property shall be registered at H M Land Registry
with title other than title absolute and Completion of Registration
has occurred then the Vendor shall pay to the Purchaser the sum of
(pound)25,000 for compensation for reduction in value of the Property
("the Reduction in Value").
5. If Completion of Registration shall not occur before 31 December 1997 then
the Purchaser shall be entitled to require the sums held in the Retention
Account (but not any interest arising thereon which shall belong and be
paid to the Vendor) to be paid to the Purchaser.
6. If Completion of Registration shall not be effected prior to 1 July 1998 or
such later date (which shall be prior to 31 December 1999) as the Company
shall notify in writing to the Vendor prior to 1 July 1998 ("the Long Stop
Date") the Company shall forthwith after the Long Stop Date transfer to the
Vendor and the Vendor shall accept such transfer all the estate right and
interest (if any) of the Company in the Property without any title
guarantee (the period from and including 1 January 1998 to the Long Stop
Date being "the Further Registration Period") and either:-
6.1 the Purchaser shall procure that the Property is returned to the
Vendor with vacant possession; or
6.2 if the Company fails to give vacant possession of the Property prior
to the Long Stop Date the Vendor shall grant and the Purchaser shall
procure that the Company accepts a Lease ("the Lease") of the Property
the term of which shall commence on the Long Stop Date, which shall
incorporate the following provisions:-
6.2.1 term: 99 years subject to the tenant being entitled to
terminate at not less than 6 and not more than 12 months
written notice served at any time prior to 31 December 1998 and
also being entitled to terminate on each 5th anniversary of the
commencement of the term on not less than 6 months written
notice expiring on the day before the relevant anniversary;
6.2.2 rent: shall be the sum of (pound)53,650 per annum, such rent to
be payable throughout the term of the lease without review, in
advance on the usual quarter days the first payment in respect
of the period commencing on the date of the Lease and ending on
the day before the next following quarter day to be made on the
date of the Lease and the tenant shall also discharge all rates
and other outgoings in respect of the Property;
6.2.3 alienation: assignment of part shall be prohibited. Assignment
of whole shall be permitted subject to obtaining the landlord's
prior written consent (not to be unreasonably withheld). As a
condition of assignment the tenant shall enter into an
authorised guarantee agreement of the assignees liabilities and
shall procure if reasonably
<PAGE>
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necessary one or more third party guarantors of such liability.
There will be no restrictions on underletting save that during
the first 21 years of the term consent of the Landlord is
required (such consent not to be unreasonably withheld);
6.2.4 alteration/redevelopment: no restrictions save for
reinstatement at the end of the term and not to do anything
which would diminish the value of the Property;
6.2.5 insurance: tenant to insure against fire and all other usual
risks in its full reinstatement value by the Company such
insurance to be in the joint names of the landlord and the
tenant. Such insurance monies to be split between the parties
in accordance with the values of their respective interests in
the Property at the relevant time.
6.2.6 repairing and decorating: tenant covenants to keep demised
premises in same condition as present as evidenced by a
schedule of condition agreed between the parties or in the
absence of agreement determined by the Expert;
6.2.7 compliance with statutory requirements: limited to covenant not
to do anything in contravention of statutory requirements;
6.2.8 the tenant to yield up in accordance with the foregoing;
6.2.9 landlord's covenants quiet enjoyment only;
6.2.10 usual rights to forfeits during first 21 years of the term,
thereafter to only arise for non-payment of rent or other
material breach of covenant; and
6.2.11 such other terms as are found in commercial leases of
industrial premises in the locality at the date hereof.
6.3 For a period of two months prior to 30 June 1998 the Vendor and the
Purchaser shall (each acting in good faith towards the other) use all
reasonable endeavours to settle the terms of the Lease incorporating
the terms referred to in paragraph 6.2 and to complete the same before
the Long Stop Date.
6.4 If after the expiry of one month of the said period during which the
negotiations for the Lease are conducted the Lease is not agreed
either the Vendor or the Purchaser shall be entitled to require that
the terms of the Lease shall be determined by an independent expert
("the Lease Expert") to be appointed on the application of either
party and in the absence of agreement by the President for the time
being of the Law Society. The Lease Expert shall not be entitled to
deviate from the terms set out in this clause 6 (but shall be entitled
to settle the precise terms and incorporate such other provisions in
relation thereto as are applicable in all the circumstances) nor shall
he compensate for any of those terms in the
<PAGE>
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drafting of other terms not covered by this Schedule.
6.6 Prior to the grant of the Lease the Purchaser shall pay the rates and
other outgoings and observe the terms of paragraph 6.2 (save for
paragraph 6.2.2) as if the Lease were granted to the Purchaser on
Completion and the Vendor shall procure that the Company shall be
entitled to remain in occupation (unless vacated pursuant to paragraph
6.1) as a licensee until the Lease has been granted and during such
term of occupation shall pay a rent for the licence equivalent to, and
discharged by the payment to the Vendor of, the interest credited to
the Retention Account (less any tax due thereon)
7. The Purchaser agrees not to assign transfer or otherwise part with
possession of its interest in the Property (except by transfer to the
Vendor under clause 6) until the Lease is granted to the Purchaser.
8. Pending completion of the Lease the Purchaser agrees to procure the
insurance of the Property against fire and all other usual risks in its
full reinstatement value by the Company such insurance to be in the joint
names of the Company and the Vendor but at the expense of the Company. In
the event of the Property being destroyed or damaged by any of the insured
risks the monies receivable under such policy of insurance shall belong to
the Company and such insurance monies shall be laid out in reinstating the
Property and on receipt of such insurance monies by the Purchaser, if
reinstatement is frustrated, the Vendor shall be entitled to receive a sum
equivalent to the amount of the insurance proceeds received by the
Purchaser from the Retention Account.
9. If during the Further Registration Period, Completion of Registration of
the Property shall be effected then the Purchaser shall forthwith pay to
the Vendor the sum of (pound)536,500 (plus VAT if applicable) less the
Reduction in Value (if any).
10. The Vendor shall indemnify, and keep the Purchaser indemnified from and
against all liability for all sums (including without limitation, losses,
damages, costs and expenses, fines, penalties or compensation) suffered or
incurred by the Purchaser or the Company directly or indirectly:-
10.1 as a result of any third party establishing a better title to the
Property than the Company and the Company not, therefore, having quiet
enjoyment of the Property at ant time during which it remains in
occupation of the Property prior to the grant of the Lease (and for
the avoidance of doubt such indemnity is to cover the reasonable and
proper costs and expenses of relocation of the Company); and
10.2 arising out of or in connection with the terms of an option agreement
("the Option Agreement") dated 31 May 1994 between THG (1) and Glen
Hamilton (2) including (but without prejudice to the generality of the
foregoing) any claim in respect of any instalments of the Option Price
(as defined in the Option Agreement) paid thereunder or any exercise
or purported exercise of the Option (as defined in the Option
Agreement) provided always that the Vendor has conduct of any such
claims or
<PAGE>
- 62 -
counterclaims and has the ability to set-off any counterclaim against
Mr Hamilton.
11. In consideration of the Vendor entering into this Agreement with the
Purchaser at the request of the Guarantor, the Guarantor hereby irrevocably
and unconditionally, as primary obligor, undertakes and guarantees the
full, prompt and complete performance by the Purchaser of:-
11.1 its obligation to procure the transfer by the Company of its interest
in the Property to the Vendor pursuant to paragraph 6 above; and
11.2 its obligations pursuant to paragraph 7 above.
<PAGE>
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/s/
............................................
SIGNED for and on behalf of
BODYCOTE INTERNATIONAL PLC
/s/
............................................
SIGNED for and on behalf of
ARMOR HOLDINGS LIMITED
/s/
............................................
SIGNED for and on behalf of
ARMOR HOLDINGS INC.
<PAGE>
Dated 16 April 1997
-------------------
ARMOR HOLDINGS, INC
- and -
ARMOR HOLDINGS LIMITED
- and -
NATWEST VENTURES NOMINEES LIMITED AND OTHERS
- and -
MARTIN BRAYSHAW
-------------------
AGREEMENT
for the sale and purchase of the whole
of the issued share capital of
DSL Group Limited
-------------------
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
<PAGE>
Tel: 0171-638-1111
Fax: 0171-972-7990
CSG/A94200010/CY445881
<PAGE>
THIS AGREEMENT is made on 16 April 1997
BETWEEN:-
(1) ARMOR HOLDINGS, INC whose principal place of business is at 13386
International Parkway, Jacksonville, Florida 32218 USA ("AHI");
(2) ARMOR HOLDINGS LIMITED whose registered office is at 10 Snow Hill,
London EC1A 2AL ("AHL");
(3) THOSE PERSONS whose names and addresses are set out in column 1 of
schedule 1 (together the "VENDORS"); and
(4) MARTIN BRAYSHAW of Redhall, 87 Main Street, Lyddington, Nr
Uppingham, Rutland LE15 9LS.
RECITALS
(A) DSL Group Limited is a private company limited by shares
incorporated in England and Wales under the Companies Act 1985 under
number 3206563. Further details relating to the Company are set out
in schedule 2.
(B) The Company has the interests in bodies corporate details of which
are set out in schedule 3.
(C) The Vendors are the registered holders and beneficial owners of the
whole of the issued share capital of the Company, the numbers and
classes of such shares of which each of the Vendors will be the
owner as at Completion being set out opposite his name in schedule 1
(and being the numbers and classes of shares in the Company
following the operation of the special resolution of the Company to
be passed as envisaged pursuant to clause 2).
(D) The Vendors have agreed to sell the whole of the issued ordinary and
deferred share capital of the Company to AHI and the whole of the
issued preference share capital of the Company to AHL on the terms
and subject to the conditions set out in this agreement free from
Encumbrances.
(E) The Warrantors have made representations to each of AHI and AHL in
the terms of the Warranties to the intent that AHI and AHL should
rely on such representations in entering into this agreement and
consumating the transactions contemplated hereby.
THE PARTIES AGREE AS FOLLOWS:-
- 1 -
<PAGE>
1. INTERPRETATION
1.1 The following provisions shall have effect for the interpretation of
this agreement.
1.2 The following words and expressions and abbreviations shall, unless
the context otherwise requires, have the following meanings:-
"ACCOUNTS" means the audited financial statements of the Company and
each of the Subsidiaries (save for US Defence Systems Incorporated
in respect of which "ACCOUNTS" shall mean the unaudited accounts in
the form attached to the Disclosure Letter and identified as such
accounts), comprising the balance sheet of the Company, the
consolidated balance sheet, profit and loss account and cash flow
statement of the Group and the balance sheet and profit and loss
account of each of the Subsidiaries, together in each case with the
notes thereon, directors' report and auditors' certificate, as at
and for the financial period, in the case of the Company, from 3
June 1996 and, in the case of each other member of the Group, from
31 March 1996 (save for Defence Systems Colombia SA whose financial
period shall be from 31 December 1995) and, in each case, ended on
the Accounts Date;
"ACCOUNTS DATE" means 31 December 1996;
"AMERICAN STOCK EXCHANGE" means American Stock Exchange, Inc.;
"ASSOCIATED COMPANY" has the meaning given to it in sections 416 et
seq. of the T.A.;
"CLAIM" means a claim in respect of a breach of Warranty;
"COMPANY" means the company described in recital (A) and also, for
the purposes of but subject to the express provisions of, clause 6
and schedule 4, means those of the company described in recital (A)
and the Subsidiaries in respect of which the relevant Warrantor
gives Warranties in accordance with clause 5;
"COMPLETION" means the completion of the sale and purchase of the
Shares in accordance with clause 4;
"COMPLETION DATE" means the date on which Completion occurs;
"CONSIDERATION SHARES" means 1,274,217 shares of common stock of par
value $0.01 each in the capital of AHI to be allotted and issued
pursuant to clause 4.4 (being such number of shares of common stock
of par value $0.01 each in the capital of AHI, rounded down to the
nearest whole number, as has an aggregate value equal to
(pound)6,725,656, and for this purpose, each share of common stock
of par value $0.01 in the capital of AHI shall be valued at the
average of the closing price of a share of common stock of par value
$0.01 in the capital of AHI for the 20 consecutive trading days
ended five consecutive trading days prior to 1 April 1997 (that is,
ended on (and including) 24 March 1997) as quoted in the
- 2 -
<PAGE>
composite/close/price table on Bloomberg for the relevant 20 days
(such average being $8.56875 per share) and such aggregate value (in
US dollars) shall be converted into pounds sterling at (pound)1
equals $1.6234);
"COVENANTORS" means Alastair Morrison, Richard Bethell, Martin
Brayshaw, Alan Golacinski, William Daniell, Noel Philp and David
Abbot;
"Deferred Shares" means the issued deferred shares of (pound)1 each
in the capital of the Company as at Completion;
"DISCLOSURE LETTER" means a letter of today's date together with the
attachments thereto addressed by the Warrantors to AHI and AHL
disclosing exceptions to the Warranties and acknowledged by or on
behalf of AHI and AHL;
"DISTRIBUTION" means a distribution as defined by sections 209 to
211 (inclusive) of the T.A. and section 418 of the T.A.;
"$" means the lawful dollar currency of the United States of America;
"ENCUMBRANCE" means any mortgage, charge (whether fixed or
floating), pledge, lien, security interest or other third party
right or interest (legal or equitable) over or in respect of the
relevant asset, security or right;
"GROUP" means the Company and the Subsidiaries;
"HAMBRO DEBT" means the sum of (pound)400,000 which is owed by the
Company to Hambro Group Investment Limited at the date hereof
pursuant to the terms of the Share Acquisition Agreement between,
inter alios, the Company and Hambro Group Investments Limited dated
31 July 1996;
"HOLDING COMPANY" has the meaning given to it in section 736 of the
Companies Act 1985;
"INSTITUTIONAL VENDORS" means NatWest Ventures Nominees Limited,
Phoenix General Partner Limited and Compass Representatives Limited;
"INSTITUTIONAL VENDORS' SOLICITORS" means Travers Smith Braithwaite
of 10 Snow Hill, London, EC1A 2AL;
"MANAGEMENT VENDORS" means Alastair Morrison, Richard Bethell, Alan
Golacinski, William Daniell, Mikhail Golovatov, Noel Philp, David
Abbot, Jonathan Garratt, Christoper Disney, Paul Beat, David de
Stacpoole and Roger Brown;
"MANAGEMENT VENDORS' SOLICITORS" means Clyde & Co. of 51 Eastcheap,
London, EC3M 1JP;
- 3 -
<PAGE>
"ORDINARY SHARES" means the issued ordinary shares of (pound)1 each
in the capital of the Company as at Completion;
"PREFERENCE SHARES" means the issued preference shares of 1p each in
the capital of the Company as at Completion;
"PROPERTIES" means the properties described in schedule 5 or any
part or parts thereof and "PROPERTY" means any one of them;
"PURCHASERS' SOLICITORS" means Ashurst Morris Crisp of Broadwalk
House, 5 Appold Street, London EC2A 2HA;
"ROTHSCHILD LOAN" means the outstanding principal and interest which
is owed by the Company to NM Rothschild & Co. pursuant to the terms
of a loan agreement dated 31 July 1996;
"SHARES" means the whole of the issued share capital of the Company;
"SUBSIDIARY" means those bodies corporate details of which are set
out in schedule 3;
"SUBSIDIARY" has the meaning given to it in section 736 of the
Companies Act 1985;
"SUBSIDIARY UNDERTAKING" has the meaning given to it in section 258
of the Companies Act 1985 as amended by the Companies Act 1989;
"T.A." means the Income and Corporation Taxes Act 1988;
"TAX" means any tax, and any duty, impost, levy or charge in the
nature of tax and any fine, penalty or interest connected therewith;
"TAXATION STATUTES" means all statutes, decrees, orders and
regulations providing for or imposing any Tax;
"VENDORS" means the Management Vendors and the Institutional
Vendors;
"WARRANTIES" means the representations and warranties set out in
schedule 4;
"WARRANTORS" means Alastair Morrison, Richard Bethell, Martin
Brayshaw, Alan Golacinski, William Daniell, Mikhail Golovatov, Noel
Philp and David Abbot.
1.3 References to documents IN THE AGREED FORM are to the relevant
document in the form agreed between the parties on or prior to the
date of this agreement and for the purposes of identification only
initialled by the Purchasers' Solicitors and the Management Vendors'
Solicitors.
- 4 -
<PAGE>
1.4 References to the parties hereto include their respective permitted
assignees and/or the respective successors in title to substantially
the whole of their respective undertakings and, in the case of
individuals, to their respective estates and personal
representatives.
1.5 References to persons shall include bodies corporate and
unincorporated, associations, partnerships and individuals. Words
denoting the singular shall include the plural and words denoting
any gender shall include all genders.
1.6 References to statutes or statutory provisions include references to
any orders or regulations made thereunder and references to any
statute, provision, order or regulation include references to that
statute, provision, order or regulation as amended, modified,
re-enacted or replaced from time to time whether before or after the
date hereof (subject as otherwise expressly provided herein) and to
any previous statute, statutory provision, order or regulation
amended, modified, re-enacted or replaced by such statute,
provision, order or regulation.
1.7 Headings to clauses, paragraphs and descriptive notes in brackets
relating to provisions of taxation statutes are for information only
and shall not form part of the operative provisions of this
agreement and shall be ignored in construing the same.
1.8 References to recitals, clauses or schedules are to recitals to,
clauses of and schedules to this agreement. The recitals and
schedules form part of the operative provisions of this agreement
and references to this agreement shall, unless the context otherwise
requires, include references to the recitals and the schedules.
1.9 Each of the Warranties expressed to be given "to the best of the
Warrantors' knowledge and belief" or "so far as the Warrantors are
aware" or otherwise qualified by reference to the knowledge of the
relevant Warrantor (other than Warranty 7.6) shall be deemed to
incorporate a further warranty that the relevant Warrantors have
made all reasonable enquiries as to the subject matter of the
relevant Warranty, and each Warrantor shall be deemed to have made
all reasonable enquiries with regard to the subject matter of the
relevant Warranty if he has diligently and in good faith sought
detailed responses to the Information Request IN THE AGREED FORM
from the appropriate employees of the Group.
1.10 Warranty 7.6 shall be deemed to incorporate a further warranty that
the relevant Warrantor has made all reasonable enquiries as to the
subject matter of the Warranty.
1.11 The obligations and liabilities of the Vendors under this agreement
shall be several, save as otherwise expressly provided.
1.12 Where any provision of this agreement applies to a jurisdiction
other than England then terms of art used herein shall bear the
meaning most closely analogous thereto in such jurisdiction.
- 5 -
<PAGE>
2. SALE AND PURCHASE
2.1 Upon the terms and subject to the conditions of this agreement, each
of the Vendors shall sell to AHI and AHI shall purchase the numbers
of Ordinary Shares and Deferred Shares of which such Vendor is the
registered holder being set out opposite his name in column 2 of
part 1 or 2 of schedule 1 (as appropriate) free from any and all
Encumbrances and together with all accrued benefits and rights now
or hereafter attaching thereto, including the right to all dividends
and other distributions (if any) declared, made or paid in respect
of such shares after the Accounts Date.
2.2 Upon the terms and subject to the conditions of this agreement, each
of the Institutional Vendors shall sell to AHL and AHL shall
purchase the number of Preference Shares of which such Institutional
Vendor is the registered holder being set out opposite his name in
column 2 of part 1 of schedule 1 free from any Encumbrance and
together with all accrued benefits and rights now or hereafter
attaching thereto, including the right to all dividends and other
distributions accruing in respect of such shares after the Accounts
Date.
2.3 Each of the Vendors hereby represents and warrants to each of AHI
and AHL (so as to bind that Vendor's personal representatives,
successors and assigns) that he:-
(a) has the right to dispose of the Ordinary Shares and the
Deferred Shares which he purports to sell; and
(b) is disposing of the Ordinary Shares and Deferred Shares
free from any and all Encumbrances and together with all
benefits and rights now or hereafter attaching thereto,
including the right to all dividends and other
distributions (if any) declared, made or paid in respect of
such shares after the Accounts Date.
2.4 Each of the Institutional Vendors hereby represents and warrants to
AHL (so as to bind that Institutional Vendor's personal
representatives, successors and assigns) that it:-
(a) has the right to dispose of the Preference Shares which it
purports to sell; and
(b) is disposing of the Preference Shares free from any
Encumbrance and together with all benefits and rights now
or hereafter attaching thereto, including the right to all
dividends and other distributions accruing in respect of
such shares after the Accounts Date.
2.5 With effect from Completion, Martin Brayshaw hereby waives all
rights which he has to acquire shares in the capital of the Company,
whether from Alastair Morrison or otherwise.
3. CONSIDERATION
3.1 The consideration for the sale of the Ordinary Shares and Deferred
Shares shall be:-
- 6 -
<PAGE>
(a) in respect of the Ordinary Shares, the Consideration Shares
credited as fully paid, to be apportioned between the
Vendors in proportion to the numbers of Ordinary Shares
respectively held by them at Completion; and
(b) in respect of the Deferred Shares, the sum of (pound)1 in
aggregate (which sum the Vendors hereby request and
authorise AHI to retain and apply for the benefit of the
Company).
3.2 The consideration for the sale of the Preference Shares shall be the
sum of (pound)4,635,000, to be apportioned between the Institutional
Vendors in proportion to the numbers of Preference Shares
respectively held by them at Completion.
4. COMPLETION
4.1 Completion shall take place at the offices of the Purchasers'
Solicitors immediately following the passing of the special
resolution and extraordinary resolutions referred to in clause 2.
4.2 On Completion, the Vendors shall deliver to AHI:-
(a) transfers in common form relating to the Ordinary Shares
and the Deferred Shares, duly executed in favour of AHI,
together with the share certificates relating thereto;
(b) resignations IN THE AGREED FORM of Charles Mackay, John
Hustler and Hugh Lenon from their offices as director
and/or secretary and any office or employment of or by the
Company or the Subsidiaries;
(c) the common seals, certificates of incorporation and
statutory books of the Company and DSL Holdings Limited;
(d) transfers relating to each share in the Subsidiaries not
registered in the name of the Company or a Subsidiary,
duly executed in favour of AHI or as it may direct;
(e) share certificates (or the equivalent evidence of title to
the relevant shares in each jurisdiction) relating to all
of the issued shares of each of the Subsidiaries;
(f) a deed of release IN THE AGREED FORM (releasing the Company
and the Subsidiaries from any liability whatsoever (actual
or contingent) which may be owing to the Institutional
Vendors by the Company or any of the Subsidiaries), duly
executed by each of the Institutional Vendors;
(g) a Registration Rights Agreement IN THE AGREED FORM, duly
executed by each of the Vendors;
(h) Investment Letters IN THE AGREED FORM, duly executed by
each of the Vendors;
- 7 -
<PAGE>
(i) a Termination Agreement IN THE AGREED FORM, duly executed
by each of the Vendors and the other parties to the
agreements to which it relates;
(j) forms of proxy IN THE AGREED FORM, duly executed by each of
the Vendors, appointing any director for the time being of
AHI as the Vendors' proxy for the purposes of exercising
the voting rights attaching to the Shares, with power to
consent to short notice of any general meeting of the
shareholders or any class thereof;
(k) an Escrow Agreement IN THE AGREED FORM, duly executed by
each of the Warrantors;
(l) service agreements IN THE AGREED FORM, duly executed by
each of Alastair Morrison, Richard Bethell and Martin
Brayshaw;
(m) letters IN THE AGREED FORM (amending their respective
service agreements), duly executed by each of Noel Philp,
David Abbot, Alan Golacinski, William Daniell, Jonathan
Garratt, Christopher Disney, Paul Beat, David de Stacpoole
and Roger Brown; and
(n) a copy of the option agreement referred to at clause 4.5,
duly certified as a true copy by the Management Vendors'
Solicitors,
and the Institutional Vendors shall deliver to AHL transfers in
common form relating to the Preference Shares, duly executed in
favour of AHL, together with the share certificates relating
thereto.
4.3 On or prior to Completion (and in any event prior to the taking
effect of the resignations of the directors referred to in paragraph
(b) of clause 4.2), the Vendors shall procure the passing of board
resolutions of the Company and each of the Subsidiaries:-
(a) sanctioning for registration (subject where necessary to
due stamping) the transfers in respect of any shares
referred to in clause 4.2;
(b) appointing Warren Kanders, Jonathan Spiller and Nick
Sokolow to be additional directors of the Company and Rob
Schiller to be an additional director of DSL Holdings
Limited; and
(c) appointing Martin Brayshaw to be secretary of each of the
Subsidiaries incorporated in England and Wales.
4.4 On Completion, immediately upon compliance by the Vendors with the
provisions of clauses 4.2 and 4.3:-
(a) AHI shall:-
- 8 -
<PAGE>
(i) allot the Consideration Shares to the Vendors, in
the respective proportions which the number of
Ordinary Shares held by them bears to the total
number of Ordinary Shares;
(ii) enter the names of the Vendors in the register of
members of AHI as the holders of the Consideration
Shares;
(iii) deliver to Latham & Watkins in New York (on behalf
of the Vendors) duly executed stock certificates in
respect of the Consideration Shares, save as
envisaged pursuant to the Escrow Agreement IN THE
AGREED FORM;
(iv) effect the listing of the Consideration Shares on the
American Stock Exchange;
(v) deliver to the Management Vendors' Solicitors and the
Institutional Vendors' Solicitors (on behalf of,
respectively, the Management Vendors and the
Institutional Vendors):-
(A) a counterpart of the Registration Rights
Agreement IN THE AGREED FORM, duly executed
by AHI;
(B) a counterpart of the Escrow Agreement IN THE
AGREED FORM, duly executed by AHI;
(C) a certified copy of a duly executed
Certificate of Good Standing in respect of
AHI IN THE AGREED FORM;
(D) a certificate (which certificate shall in the
absence of manifest error be conclusive):-
(I) stating the number of the
Consideration Shares; and
(II) attaching a print-out of Bloomberg
showing the closing price of a share
of common stock of par value $0.01 in
the capital of AHI for the 20
consecutive trading days ended five
consecutive trading days prior to 1
April 1997 (that is, ended on (and
including) 24 March 1997); and
(E) a copy of the lock-up letter agreement made
by way of letter dated 18 January 1996 from
Jonathan Spiller to Kanders Florida
Holdings, Inc; and
(vi) procure that the Company forthwith repays the
Rothschild Loan; and
- 9 -
<PAGE>
(b) AHL shall pay to the Institutional Vendors Solicitors the
sum of (pound)4,635,000, in full and final settlement of
the consideration due by AHL to the Institutional Vendors
for the Preference Shares, which sum shall be paid by
telegraphic transfer to National Westminster Bank plc, City
of London office, PO Box 12258, 1 Princes Street, London
EC2R 8PA, sort code: 60-00-01, account no: 00859184.
5. WARRANTIES GIVEN BY THE WARRANTORS
5.1.1 Alastair Morrison and Richard Bethell jointly and severally
represent and warrant to each of AHI and AHL in respect of the
Company, DSL Holdings Limited, Brooksight Limited, Defence Systems
International Limited, DSL Security Systems (South Africa) (Pty)
Limited, DSL Security (PNG) Limited, Societe Africaine de Personnel
de Logistique et de Liason SARL and Defence Systems Limited in the
terms of the Warranties and so that the remedies of each of AHI and
AHL in respect of any breach of any of the Warranties shall continue
to subsist notwithstanding Completion.
5.1.2 Alastair Morrison, Richard Bethell and Alan Golacinski jointly and
severally represent and warrant to each of AHI and AHL in respect of
US Defense Systems Incorporated, US DS Zaire SARL and Defensetse
Systems Equador USDSE SA in the terms of the Warranties and so that
the remedies of each of AHI and AHL in respect of any breach of any
of the Warranties shall continue to subsist notwithstanding
Completion.
5.1.3 Alastair Morrison, Richard Bethell and William Daniell jointly and
severally represent and warrant to each of AHI and AHL in respect of
Defense Systems Columbia SA in the terms of the Warranties and so
that the remedies of each of AHI and AHL in respect of any breach of
any of the Warranties shall continue to subsist notwithstanding
Completion.
5.1.4 Alastair Morrison, Richard Bethell and Noel Philp jointly and
severally represent and warrant to each of AHI and AHL in respect of
Defence Systems (Jersey) Limited, DSL Security (Asia) Pte Limited
and Far East Defence Systems Limited in the terms of the Warranties
and so that the remedies of each of AHI and AHL in respect of any
breach of any of the Warranties shall continue to subsist
notwithstanding Completion.
5.1.5 Alastair Morrison, Richard Bethell, Mikhail Golovatov and David
Abbot jointly and severally represent and warrant to each of AHI and
AHL in respect of Gorandel Trading Limited in the terms of the
Warranties and so that the remedies of each of AHI and AHL in
respect of any breach of any of the Warranties shall continue to
subsist notwithstanding Completion.
5.1.6 Alastair Morrison, Richard Bethell and David Abbot jointly and
severally represent and warrant to each of AHI and AHL in respect of
DSL (Overseas) Limited in the terms of the Warranties and so that
the remedies of each of AHI and AHL in respect of any breach of any
of the Warranties shall continue to subsist notwithstanding
Completion.
- 10 -
<PAGE>
5.1.7 Martin Brayshaw represents and warrants to each of AHI and AHL in
respect of the Company and each of the Subsidiaries (other than
Jardine Securicor Gurkha Services Limited and DSL-Sesegeur) in the
terms of the Warranties and so that the remedies of each of AHI and
AHL in respect of any breach of any of the Warranties shall continue
to subsist notwithstanding Completion.
5.1.8 Alastair Morrison represents and warrants to each of AHI and AHL in
respect of Jardine Securicor Gurkha Services Limited, USDS (Med)
Limited and Maximum Security Indochina Limited in the terms of the
Warranties (as if the same were all qualified by reference to
Alastair Morrison's knowledge) and so that the remedies of each of
AHI and AHL in respect of any breach of any of the Warranties shall
continue to subsist notwithstanding Completion. For the purposes of
this clause 5.1.8, the provisions of clause 1.9 shall not apply.
5.1.9 Alastair Morrison and Richard Bethell jointly and severally
represent and warrant to each of AHI and AHL in respect of
DSL-Sesegeur in the terms of the Warranties (as if the same were all
qualified by reference to the Warrantors' knowledge) and so that the
remedies of each of AHI and AHL in respect of any breach of any of
the Warranties shall continue to subsist notwithstanding Completion.
For the purposes of this clause 5.1.9, the provisions of clause 1.9
shall not apply.
5.1.10 Notwithstanding the above provisions of this clause 5.1, the
Warranties set out in paragraphs 7.4 and 7.5 of schedule 4 are given
only by Alastair Morrison, Richard Bethell and Martin Brayshaw, on a
joint and several basis in the case of Alastair Morrison and Richard
Bethell and on a several basis in the case of Martin Brayshaw, in
each case in respect of all of the Company and the Subsidiaries. For
the purposes of the Warranties set out in paragraphs 7.4 and 7.5 of
schedule 4, the references to the Warrantors shall be deemed to be
references only to Alastair Morrison, Richard Bethell and Martin
Brayshaw.
5.2 Any information supplied by or on behalf of the Company or the
Subsidiaries to the Warrantors or their agents or accountants,
solicitors or other advisers in connection with the Warranties, the
Disclosure Letter or otherwise in relation to the business and
affairs of the Company or the Subsidiaries shall not constitute a
representation or warranty or guarantee as to the accuracy thereof
by the Company or any of the Subsidiaries and each of the Warrantors
undertakes to AHI that:-
(a) he will not bring any claim against the Company or the
Subsidiaries in respect thereof; and
(b) he will not bring any claim against any of the respective
agents or employees of the Company or the Subsidiaries in
respect thereof, save in the case of fraud or fraudulent
misrepresentation.
For the avoidance of doubt, where any of the Warranties are given on
a joint and several basis, the above provisions of this clause 5.2
shall not prevent a Warrantor from bringing
- 11 -
<PAGE>
a claim in respect of a right of contribution against any other of
the Warrantors with whom he is jointly liable.
5.3 If a Warrantor is in breach of any of the Warranties, the relevant
Warrantor shall pay to AHI or AHL on demand the amount necessary to
put the Company and the Subsidiaries into the position which would
have existed if the said Warranty had been true and not been
breached together with all costs and expenses incurred by AHI, AHL,
the Company or the Subsidiaries as a result of such breach. Where
AHI or AHL has made a demand against a Warrantor pursuant to this
clause 5.3, and that Warrantor has either agreed that he is liable
to satisfy that demand and has satisfied that demand or a court of
competent jurisdiction has held that Warrantor to be liable to
satisfy that demand and in either case the Warrantor has satisfied
the demand, neither AHI nor AHL shall be entitled to bring a further
claim for damages for breach of Warranty against that Warrantor in
respect of the same facts or circumstances as gave rise to the
demand made pursuant to this clause 5.3.
5.4 Each of the Warranties shall be construed as a separate
representation or warranty (as the case may be) and (save as
expressly provided to the contrary) shall not be limited by the
terms of any of the other Warranties or by any other term of this
agreement.
5.5 The Warrantors acknowledge that each of AHI and AHL has entered into
this agreement in reliance upon the Warranties.
6. LIMITATION ON LIABILITY IN RESPECT OF THE WARRANTIES GIVEN BY
THE WARRANTORS
6.1 The Warrantors shall not be liable for any Claim to the extent that
the facts or circumstances giving rise thereto are fairly disclosed
in the Disclosure Letter or expressly provided for or stated to be
exceptions under the terms of this agreement. No letter, document or
other communication shall be deemed to constitute a disclosure for
the purposes of the Warranties unless the same is expressly referred
to in the Disclosure Letter.
6.2 The maximum liability of each Warrantor in respect of any breaches by
him of Warranties shall be:-
(a) in the case of each of the Warrantors (other than Alastair
Morrison and Martin Brayshaw), an amount equal to the lower
of the aggregate value of the Consideration Shares allotted
to him at Completion and the aggregate value of the
Consideration Shares allotted to him at the date of
determination of the liability, and for this purpose:-
(i) the aggregate value of the Consideration Shares
allotted to him at Completion shall be deemed to be
an amount equal to the number of Consideration
Shares allotted to him at Completion multiplied by
$8.56875; and
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<PAGE>
(ii) the aggregate value of the Consideration Shares
allotted to him at the date of determination of the
liability shall be deemed to be an amount equal to
the number of Consideration Shares allotted to him
at Completion multiplied by the closing price of a
share of common stock of par value $0.01 in the
capital of AHI on the American Stock Exchange on the
trading day prior to such determination;
(b) in the case of Alastair Morrison, an amount equal to the
lower of $1,050,902 and the aggregate value of 122,644
shares of common stock of par value $0.01 each in the
capital of AHI at the date of determination of the
liability, and for this purpose the aggregate value of
122,644 shares of common stock of par value $0.01 each in
the capital of AHI at the date of determination of the
liability shall be deemed to be an amount equal to the
closing price of a share of common stock of par value
$0.01 in the capital of AHI on the American Stock Exchange
on the trading day prior to such determination multiplied
by 122,644; and
(c) in the case of Martin Brayshaw, an amount equal to the
lower of $750,735 and the aggregate value of 87,613 shares
of common stock of par value $0.01 each in the capital of
AHI at the date of determination of the liability, and for
this purpose the aggregate value of 87,613 shares of
common stock of par value $0.01 each in the capital of AHI
at the date of determination of the liability shall be
deemed to be an amount equal to the closing price of a
share of common stock of par value $0.01 in the capital of
AHI on the American Stock Exchange on the trading day
prior to such determination multiplied by 87,613.
6.3.1 Subject as provided in clause 6.3.2, the Warrantors shall not be
liable for any Claim:-
(a) where the liability of the relevant Warrantor in respect
of that Claim would but for this paragraph (a) have been
less than (pound)1,000; and
(b) unless and until the aggregate liability of the Warrantors
in respect of that Claim (not being a Claim for which
liability is excluded under paragraph (a) above) when
aggregated with the liability of the Warrantors in respect
of all other Claims (not being a Claim for which liability
is excluded under paragraph (a) above) exceeds
(pound)500,000 and in the event that the aggregate
liability of the Warrantors in respect of all Claims
exceeds (pound)500,000 the Warrantors shall be liable to
AHI for the whole amount of such Claims and not merely the
excess over (pound)500,000.
6.3.2 Paragraph (b) of clause 6.3.1 shall not prevent AHI or AHL from
claiming and shall not limit the liability of the Warrantors for any
breach of Warranty where the liability of the Warrantors in respect
of that Claim would equal or exceed (pound)250,000.
6.4 The Warrantors shall not be liable for any Claim to the extent that:-
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<PAGE>
(a) an express provision or reserve in respect of the matter
giving rise to the Claim is made in the Accounts; or
(b) the Claim arises as a result of or is increased by the
passing of, or any change in, any legislation (primary or
subordinate) after the date of this agreement or any
change of law or administrative practice of any
governmental department or regulatory body (including,
without limitation, any change of practice in relation to
extra statutory concessions or any decision of the Courts
or any jurisdiction altering the accepted interpretation
of any law, statute, case law or legislation) after the
date of this agreement, or any increase in the rates or
any imposition of Tax or any withdrawal of relief from Tax
or any other change in the scope of Tax in force at the
date of this agreement (in either case whether
retrospective or otherwise) PROVIDED THAT this paragraph
(b) shall not apply to the extent that the relevant
Warrantor against whom the Claim is being brought actually
knew, as at the date of this agreement, that such event
would occur (and for the avoidance of doubt, for the
purposes of this proviso, a Warrantor shall not be deemed
to know that such event would occur if he would only have
known that such event would occur if he had made further
enquiries); or
(c) the Claim arises as a result of or is increased by AHI
making any claim, election, surrender or disclaimer (or
revoking or waiving of any claim, election, surrender or
disclaimer already made) for any Tax purpose after the
date of this agreement where AHI ought reasonably to have
known (having made all reasonable enquiries) that the
making of the claim, election, surrender or disclaimer (or
the revoking or waiving of any claim, election, surrender
or disclaimer already made) would give rise to the breach
of the Warranties in respect of which the Claim is made or
would increase the damage suffered as a result of the
breach (as the case may be); or
(d) the Claim arises as a result of or is increased by any
change after the date of this agreement in the accounting
reference date of the Company or in the accounting policies
adopted by the Company or in the accounting bases on which
the Company values its assets (unless the same is to comply
with applicable statements of Standard Accounting
Practice); or
(e) the Claim arises as a result of or is increased by any
change in the nature of the business or trade of the
Company or any sale or disposal of any share or interest in
the Company or any cessation of the business or trade of
any part of the Company in any such case after the date of
this agreement; or
(f) the Claim arises as a result of or is increased by any
voluntary act or omission of AHI or AHL or their respective
agents or successors in title after Completion (other than
in the ordinary course of business of the Company) where
AHI or AHL ought reasonably to have known (having made all
reasonable enquiries) that the act or omission would give
rise to the breach of the Warranties in respect of which
the
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<PAGE>
Claim is made or would increase the damage suffered as a
result of the breach (as the case may be); or
(g) the loss or damage giving rise to the Claim would have been
reduced but for the failure or omission of AHI or AHL to
make any claim, election, surrender or disclaimer or to
give any notice or consent under the provisions of any
taxation statute after the date of this agreement where AHI
or AHL ought reasonably to have known (having made all
reasonable enquiries) that the making of the claim,
election, surrender or disclaimer or the giving of the
notice or consent would result in the loss or damage being
reduced; or
(h) as regards any Claim for Tax, such Claim arises or is
increased by virtue of (i) any disclaimer of capital
allowances made by the Company after the date of this
agreement or (ii) any disallowance of any relief,
allowance, deduction or credit in respect of trading losses
or advance corporation tax arising from a change in the
nature of conduct of any trade or business carried on by
the Company occurring after the date of this agreement.
6.5 The Warrantors shall not be required to make any payment in respect
of any Claim to the extent that the Claim arises as a result of a
contingent liability unless and until such contingent liability
becomes an actual liability provided that in such event the periods
for giving notice of such Claim and pursuing such Claim referred to
in clause 6.6 shall only begin to run once such contingent liability
becomes an actual liability.
6.6 A Warrantor shall not be liable for any Claim unless AHI or AHL has
given written notice to that Warrantor setting out so far as
reasonably available to AHI or AHL (as the case may be) reasonable
details of the Claim on or before the earlier of the first
anniversary of Completion and the issuance of the audited accounts
of AHI for the year ending 31 December 1997 and the amount payable
in respect of the Claim is agreed by the relevant Warrantor or legal
proceedings are instituted in respect of the Claim by the due
service of process in accordance with clause 17.3 on the relevant
Warrantor in either case within seven months of the date of such
written notice.
6.7 In assessing any liabilities, damages or other amounts recoverable
by AHI or AHL as a result of any Claim there shall be taken into
account any benefit accruing to the Company from any amount of any
relief from Tax obtained or obtainable by the Company and any amount
by which any Tax for which the Company is or may be liable to be
assessed or accountable is reduced or extinguished, arising directly
or indirectly in each case in consequence of the matter which gives
rise to such Claim.
6.8.1 Clause 6.8.2 shall apply in circumstances where:-
(a) any claim is made against the Company which AHI or AHL
ought reasonably to expect will give rise to a Claim; or
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(b) the Company is entitled to make recovery from some other
person (including any insurance company and the Inland
Revenue) any sum in respect of any facts or circumstances
by reference to which a Warrantor has admitted liability
under the Warranties; or
(c) a Warrantor has paid to AHI or AHL an amount in respect of
a Claim and subsequent to the making of such payment the
Company becomes entitled to recover from some other person
(including any insurance company and the Inland Revenue) a
sum which is referable to that payment.
6.8.2 Without prejudice to the rights of AHI and AHL to make any Claim,
each of AHI and AHL undertakes to the Warrantors that:-
(a) provided that the relevant Warrantor has admitted
liability (but not necessarily the quantum of that
liability) to AHI or AHL (as the case may be), at the
relevant Warrantor's expense and subject to the relevant
Warrantor having first secured AHI and AHL to their
reasonable satisfaction in respect of such expense and any
further liabilities that may be incurred by AHI, AHL or
the Company as a result of AHI or AHL (as the case may be)
complying with the provisions of this paragraph (a), it
will procure that the Company promptly and diligently take
all such action as that Warrantor may reasonably request
(including the institution of proceedings and the
instruction of professional advisers approved by that
Warrantor to act on behalf of the Company) to avoid,
dispute, resist, compromise, defend or appeal against any
such claim against the Company as is referred to in
paragraph (a) of clause 6.8.1 or to make such recovery by
the Company as is referred to in paragraph (b) or (c) of
clause 6.8.1, as the case may be, in accordance with the
instructions of the relevant Warrantor to the intent that
such action shall be delegated entirely to that Warrantor;
(b) provided that the relevant Warrantor has admitted
liability (but not necessarily the quantum of that
liability) to AHI or AHL (as the case may be) and subject
to the relevant Warrantor having first secured AHI and AHL
to their reasonable satisfaction in respect of any further
liabilities that may be incurred by AHI, AHL or the
Company as a result of AHI or AHL (as the case may be)
complying with the provisions of this paragraph (b), it
will procure that the Company does not settle or
compromise any liability or claim to which any such action
is referable without the prior written consent of the
relevant Warrantor, which consent shall not be
unreasonably withheld or delayed;
(c) it will provide all such information and documentation as
the relevant Warrantor may reasonably request in connection
therewith, subject to the Warrantor entering into a
confidentiality undertaking in respect thereof in such form
as AHI and AHL may reasonably require and subject further
to the provision of such information and documentation not
resulting in the loss by AHI, AHL or the Company of any
claim to legal privelege which it might otherwise be
entitled to bring; and
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<PAGE>
(d) in the circumstances mentioned in paragraph (c) of clause
6.8.1, it will promptly repay to the relevant Warrantor an
amount equal to the amount so recovered or, if lower, the
amount paid by the relevant Warrantor to AHI or AHL (as the
case may be), less any Tax payable by AHI or AHL (as the
case may be) in respect thereof.
6.9 Without prejudice and in addition to any duty imposed on them by law
so to do, AHI and AHL will, and will procure that the Company will,
use their respective reasonable endeavours to mitigate any loss or
damage in respect of which AHI or AHL makes a Claim.
6.10 None of the limitations on the liability of the Warrantors in this
clause 6 shall apply in the case of fraud, fraudulent
misrepresentation or deliberate concealment.
7. WARRANTIES GIVEN BY AHI AND AHL
7.1 AHI and AHL jointly and severally represent and warrant to each of
the Vendors that:-
(a) AHI is a company duly incorporated, validly existing and
in good standing under the laws of the State of Delaware,
USA; has all material licences and qualifications legally
required to do business and is in good standing as a
foreign corporation in each jurisdiction where the nature
of the properties owned, leased or operated by it and the
business transacted by it require such licensing or
qualification except where the failure to be so licensed
or qualified would not have a material adverse affect on
AHI and its subsidiaries taken as a whole; has full
corporate power and authority to conduct its business and
own its properties as now conducted and owned and to make,
execute, deliver and perform this agreement, the
Registration Rights Agreement IN THE AGREED FORM and the
Escrow Agreement IN THE AGREED FORM and the transactions
contemplated thereby; and has taken such corporate action
as is necessary to enable it to perform its obligations
hereunder and under the agreements contemplated hereby;
(b) this agreement has been duly executed and delivered by AHI
and AHL and, if duly executed and delivered by all other
parties, constitutes legal, valid and binding obligations
of each of AHI and AHL enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy,
reorganisation and other laws affecting the enforcement of
creditors' rights generally from time to time in effect and
to the exercise of judicial discretion in accordance with
general equitable principles;
(c) the execution and delivery of this agreement, together with
all documents and instruments contemplated herein, the
consummation of the transactions contemplated thereby and
the compliance with the terms, conditions and provisions
thereof by AHI do not (i) contravene any provision of AHI's
articles of incorporation or by-laws; (ii) conflict with or
result in a breach of or constitute a default (or an event
which would, with the passage of time or the giving of
notice or both, constitute a default) under any of the
terms, conditions or provisions of any indenture, mortgage,
loan
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<PAGE>
or credit agreement or any other agreement or instrument to
which AHI or any of its subsidiaries is a party or by which
it or its assets are bound or affected and which is
material to AHI and its subsidiaries (taken as a whole);
(iii) violate or constitute a breach of any decision,
judgment or order of any court or arbitration board, or of
any governmental department, commission, board, agency or
instrumentality, domestic or foreign by which AHI is bound
or to which it is subject where the violation or breach is
material to AHI and its subsidiaries (taken as a whole); or
(iv) violate any applicable law, rule or regulation by
which AHI or any of its subsidiaries or any of their
respective property is bound where the violation is
material to AHI and its subsidiaries (taken as a whole);
(d) save for the approval by the SEC of the registration
statement in respect of the Consideration Shares, no
consent or approval of, or filing and expiration of a
period for disapproval by, any US federal or state
governmental authority is required for AHI or AHL to
consummate the transactions contemplated by this agreement;
(e) there are no actions, suits, causes of action, claims,
litigation, arbitration, administrative hearings or other
form of proceedings or disputes pending, or to the best of
the knowledge of AHI threatened against, involving or
affecting AHI or any of its subsidiaries, in any court, at
law or in equity, or before any arbitration board or any
governmental department, commission, board, bureau, agency
or instrumentality, which would have a material adverse
effect on the business of AHI and its subsidiaries taken as
a whole;
(f) the only issued and outstanding capital stock of AHI (as
at immediately prior to the issue of the Consideration
Shares) is as disclosed pursuant to public filings in the
US;
(g) save as disclosed pursuant to public filings in the US,
there are no options, warrants, pre-emption rights,
conversion rights, agreements or other rights outstanding
which could require the issue by AHI of shares of common
stock in the capital of AHI or other ownership interests in
AHI;
(h) the Consideration Shares will not be subject to any
restriction on transfer, other than those restrictions
required by the United States Securities Act of 1933, as
amended; and
(i) upon compliance by AHI of its obligations pursuant to
paragraphs (a)(i), (a)(ii) and (a)(iii)(A) of clause 4.4,
each of the Vendors will receive full title to the
Consideration Shares allotted to him, which Consideration
Shares will be validly issued and delivered fully paid and
non-assessable, free and clear of all Encumbrances (save as
envisaged pursuant to the Escrow Agreement referred to at
paragraph (l) of clause 4.2).
7.2 Neither AHI nor AHL shall be liable for any claim in respect of a
breach of clause 7.1:-
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<PAGE>
(a) where the liability of AHI or AHL in respect of that claim
would but for this paragraph (a) have been less than
(pound)1,000; and
(b) unless and until the aggregate liability of AHI and AHL in
respect of that claim (not being a claim for which
liability is excluded under paragraph (a) above) when
aggregated with the liability of AHI and AHL in respect of
all other claims in respect of a breach of clause 7.1 (not
being a claim for which liability is excluded under
paragraph (a) above) exceeds(pound)500,000 and in the
event that the aggregate liability of AHI and AHL in
respect of all claims in respect of a breach of clause 7.1
exceeds (pound)500,000 AHI and AHL shall be liable to the
Vendors for the whole amount of such claims and not merely
the excess over(pound)500,000.
7.3 Neither AHI nor AHL shall be liable for any claim in respect of a
breach of clause 7.1 unless the Vendors have given written notice to
AHI or AHL setting out so far as reasonably available to the Vendors
reasonable details of the claim on or before the earlier of the
first anniversary of Completion and the publication of the audited
accounts of AHI for the year ending 31 December 1997 and the amount
payable in respect of the claim is agreed by AHI or AHL or legal
proceedings are instituted in respect of the claim by the due
service of process on AHI or AHL in either case within seven months
of the date of such written notice.
8. RESTRICTIONS
8.1.1 Each of the Covenantors hereby undertakes to each of AHI and AHL
(for themselves and as trustees for each of their subsidiaries) that
he will not (except as otherwise agreed in writing with AHI or AHL)
either solely or jointly with any other person:-
(a) during the three years following the Completion Date carry
on or be engaged or concerned or (save as the holder of
Shares or debentures in a listed company which confer not
more than five per cent. of the votes which could be cast
at a general meeting of the company) interested directly or
indirectly in any business which provides, within the
Restricted Territory, services similar to those services
provided by the Company and/or the Subsidiaries at
Completion;
(b) during the three years following the Completion Date
solicit or accept (either on his own account or as the
agent of any other person), within the Restricted
Territory, the custom of any person in respect of services
competitive with those services provided by the Company or
the Subsidiaries during the period of 12 months prior to
Completion, such person having been a customer of the
Company or the Subsidiaries in respect of such goods or
services during such period;
(c) during the three years following the Completion Date
induce, solicit or endeavour to entice any person who
during the period of 12 months prior to Completion was
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an employee of the Company or the Subsidiaries occupying a
senior or managerial position, to leave the service or
employment of the Company or the Subsidiaries; or
(d) at any time use any trade name used by the Company or any
Subsidiary at any time during the five years immediately
preceding the date of this agreement or any other name
intended or likely to be confused with any such trade name.
8.1.2 For the purposes of clause 8.1.1, "RESTRICTED TERRITORY" means, in
respect of each of the Covenantors, the territory or territories set
out opposite his name in the following table:-
==============================================================================
NAME RESTRICTED TERRITORY
- ------------------------------------------------------------------------------
Alastair Morrison each country in which the Company or any
of the Subsidiaries provides services at
Completion
- ------------------------------------------------------------------------------
Richard Bethell each country in which the Company or any
of the Subsidiaries provides services at
Completion
- ------------------------------------------------------------------------------
Martin Brayshaw each country in which the Company or any
of the Subsidiaries provides services at
Completion
- ------------------------------------------------------------------------------
David Abbot Russia and Central Asia
- ------------------------------------------------------------------------------
Noel Philp Algeria, Saudi Arabia, Singapore and
Indonesia
- ------------------------------------------------------------------------------
Alan Golacinski Zaire
- ------------------------------------------------------------------------------
William Daniell Colombia and Peru
==============================================================================
8.2 Alan Golacinski hereby further undertakes to each of AHI and AHL
(for themselves and as trustees for each of their subsidiaries) that
he will not (except as otherwise agreed in writing with AHI or AHL)
either solely or jointly with any other person:-
(a) during the three years following the Completion Date carry
on or be engaged or concerned or (save as the holder of
Shares or debentures in a listed company which confer not
more than five per cent. of the votes which could be cast
at a general meeting of the company) interested directly or
indirectly in any business which provides services similar
to those services provided by the Company and/or the
Subsidiaries at Completion to any US embassy; or
(b) during the three years following the Completion Date
solicit or accept (either on his own account or as the
agent of any other person) the custom of any US embassy in
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<PAGE>
respect of services competitive with those services
provided by the Company or the Subsidiaries to any US
embassy during the period of 12 months prior to Completion.
8.3 Each of the Covenantors hereby further undertakes to each of AHI and
AHL that he will not at any time divulge to any third party
whatsoever or use for his own or another's advantage any of the
confidential information, intellectual property, designs, formulae,
inventions or improvements relating to products or prospective
products designed, manufactured or sold by the Company or any of the
Subsidiaries before the date of this agreement or any other trade
secrets or confidential know-how or confidential financial or
trading information as to customers or suppliers or in relation to
the business, finances, dealings or affairs of the Company or any of
the Subsidiaries save only (a) insofar as the relevant Covenantor
may prove the same has become a matter of public knowledge
(otherwise than by reason of a breach by him of this clause 8.3) or
(b) insofar as may be required by law.
8.4 The Covenantors agree that the undertakings contained in this clause
8 are reasonable and are entered into for the purpose of protecting
the goodwill of the business of the Company and the Subsidiaries and
that accordingly the benefit of the undertakings may be assigned by
AHI or AHL and their successors in title without the consent of the
Covenantors.
8.5 Each undertaking contained in this clause 8 shall be construed as a
separate undertaking and if one or more of such undertakings is held
to be against the public interest or unlawful or in any way an
unreasonable restraint of trade the remaining undertakings shall
continue to bind the Covenantors.
8.6 If any undertaking contained in this clause 8 would be void as drawn
but would be valid if the period of application were reduced or if
some part of the undertaking were deleted the undertaking in
question shall apply with such modification as may be necessary to
make it valid and effective.
8.7 No provision of this agreement, by virtue of which this agreement is
subject to registration (if such be the case) under the Restrictive
Trade Practices Act 1976, shall take effect until the day after
particulars of this agreement have been furnished to the Director
General of Fair Trading pursuant to section 24 of that Act. For this
purpose the expression this "AGREEMENT" includes any agreement or
arrangement of which this agreement forms part and which is
registrable or by virtue of which this agreement is registrable.
9. ANNOUNCEMENTS, ETC
9.1 Neither the making of this agreement nor its terms shall be
disclosed by any party hereto without the prior consent of the other
parties unless disclosure is required by law or the rules of the
American Stock Exchange.
9.2 For the purpose of this clause 9 each party hereby consents to the
issue of a press release in respect of the transactions contemplated
hereby IN THE AGREED FORM.
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<PAGE>
10. COSTS
Save as expressly otherwise provided in this agreement each of the
parties hereto shall bear its own legal, accountancy and other
costs, charges and expenses connected with the negotiation,
preparation and implementation of this agreement and any other
agreement incidental to or referred to in this agreement.
11. EFFECT OF COMPLETION
The terms of this agreement shall insofar as not performed at
Completion and subject as specifically otherwise provided in this
agreement continue in force after and notwithstanding Completion.
12. ENTIRE AGREEMENT
This agreement (together with any documents referred to herein)
constitutes the entire agreement between the parties hereto in
connection with the subject matter of this agreement. No party has
relied upon any representation save for any representation expressly
set out in this agreement (or any document referred to herein).
13. WAIVER, AMENDMENT
13.1 No waiver of any term, provision or condition of this agreement
shall be effective unless such waiver is evidenced in writing and
signed by the waiving party.
13.2 No omission or delay on the part of any party hereto in exercising
any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof or
of any other right, power or privilege. The rights and remedies
herein provided are cumulative with and not exclusive of any rights
or remedies provided by law.
13.3 No variation to this agreement shall be effective unless made in
writing and signed by all the parties.
14. FURTHER ASSURANCES
At any time after Completion the parties shall at their own expense
execute all such documents and do such acts and things as may
reasonably be required for the purpose of giving full effect to this
agreement.
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<PAGE>
15. NOTICES
15.1 Save as specifically otherwise provided in this agreement any
notice, demand or other communication to be served under this
agreement may be served upon any party hereto only by posting by
first class post or delivering the same or sending the same by
facsimile transmission to the party to be served at its address
above or in schedule 1, or facsimile number given below or at such
other address or number as he or it may from time to time notify in
writing to the other parties hereto:-
Natwest Nominees Ventures
Limited - Fax no: 0171 374 3580
Marked for the attention of:
William Jackson/Martin
Dunn
Phoenix General Partner Limited - Fax no: 0171 638 3487
Marked for the attention of:
Hugh Lenon
Compass Representatives Limited - Fax no: 0171 638 3487
Marked for the attention of:
Hugh Lenon
AHI - Fax number: 00 1 904 741 5403
Marked for the attention of:
Jonathan Spiller
AHL - c/o Armor Holdings, Inc
Fax number: 00 1 904 741 5403
Marked for the attention of:
Jonathan Spiller
15.2 A notice or demand served by first class post shall be deemed duly
served 48 hours after posting, if posted from and to addresses in
the same country and 10 days after posting, if posted from and to
addresses in different countries, and a notice or demand sent by
facsimile transmission shall be deemed to have been served at the
time of transmission and in proving service of the same it will be
sufficient to prove, in the case of a letter, that such letter was
properly stamped or franked first class or air mail, addressed and
placed in the post and, in the case of a facsimile transmission,
that such facsimile was duly transmitted to the current facsimile
number of the addressee as provided in clause 15.1.
16. COUNTERPARTS
This agreement may be executed in any number of counterparts and by
the several parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.
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<PAGE>
17. GOVERNING LAW AND SUBMISSION TO JURISDICTION
17.1 This agreement shall be governed by and construed in accordance with
English law.
17.2 The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of the High Court of Justice in London for the purpose
of hearing and determining any dispute arising out of this agreement
and for the purpose of enforcement of any judgment against their
respective assets.
17.3 Each of the Management Vendors agrees that service of any writ,
notice or other document for the purpose of any proceedings in such
court shall be duly served upon him if delivered or sent by
registered post to the Management Vendors' Solicitors (marked for
the attention of Jon Rayman, reference "Project Cabernet").
18. INVALIDITY
If at any time any one or more of the provisions hereof is or
becomes invalid, illegal or unenforceable in any respect under any
law, the validity, legality and enforceability of the remaining
provisions hereof shall not be in any way affected or impaired
thereby.
19. NO RIGHTS OF TERMINATION
No party shall have any right to rescind or otherwise terminate this
agreement for any reason whatsoever.
20. POOLING
The parties hereto acknowledge that AHI has indicated that it is an
integral part of the transactions contemplated hereby that such
transactions be treated for accounting purposes as a pooling of
interests under the Internal Revenue Code of 1986 of the US, as
amended. AHI confirms to the Vendors that it has received the
written advice of Deloitte & Touche LLP, its accountants, to the
effect that the transactions will be so treated.
IN WITNESS whereof this agreement has been executed on the date first above
written.
- 24 -
<PAGE>
SCHEDULE 1
THE VENDORS
(1) (2)
NAME AND ADDRESS NO. OF ORDINARY NO. OF DEFERRED NO. OF PREFERENCE
SHARES SHARES SHARES
NatWest Nominees 23,181 32,376 2,444,444
Ventures Limited
135 Bishopsgate
London EC2M 3UR
Phoenix General 18,302 25,559 1,929,899
Partner Limited
One Laurence Poutney
Hill
London EC4R 0EU
Compass 242 341 25,657
Representatives
Limited
One Laurence Poutney
Hill
London EC4R 0EU
Alastair Morrison 11,380 5,173 -
Flat 6
21 Embankment
Gardens
London SW3 4LW
Richard Bethell 7,586 3,447 -
60 Bromfelde Road
London SW4 6PR
David Abbot 689 689 -
2 Old Lane Gardens
Cobham
Surrey KT1 1NN
Noel Philp 2,068 1,033 -
75 Clabon Mews
London SW1X 0EQ
- 25 -
<PAGE>
(1) (2)
NAME AND ADDRESS NO. OF ORDINARY NO. OF DEFERRED NO. OF PREFERENCE
SHARES SHARES SHARES
William Daniell 2,069 - -
Carrera 108A
No. 3-21
Bogota
Colombia
Alan Golacinski 2,069 - -
5116 Woodmire Lane
Alexandria
Virginia 22311
USA
Mikhail Golovatov 1,035 - -
22-39 Bolshaya
Nikitshaya Street
Moscow 103009
Russia
Paul Beat 69 69 -
Green Valley
Gemini Way
Constantia
Cape Town 7800
South Africa
Roger Brown 69 69 -
80 Chipchase Court
New Hartley
Whitley Bay
Tyne & Wear
NE25 0SR
Christopher Disney 69 69 -
216 Andover Court
North East
Leesburg
Virginia 2017
USA
Jonathan Garratt 69 69 -
Wistaston
Kings Pyon
Hereford HR4 8PZ
- 26 -
<PAGE>
(1) (2)
NAME AND ADDRESS NO. OF ORDINARY NO. OF DEFERRED NO. OF PREFERENCE
SHARES SHARES SHARES
David de Stacpoole 69 69 -
Westgate Old Rectory
Burnham Market
Kings Lynn
Norfolk PE31 8JR
- 27 -
<PAGE>
SCHEDULE 2
PARTICULARS RELATING TO THE COMPANY
Name: DSL GROUP LIMITED
Jurisdiction of incorporation: England and Wales
Registered no: 03206563
Date of incorporation: [ ]
Registered office: Egginton House
25-28 Buckingham Gate
London SW1E 6LD
Authorised share capital: (pound)181,929
divided into 4,400,000 Preference
Shares of 1p each, 100,000 Preferred
Ordinary Shares of (pound)1 each,
27,585 Ordinary "A" Shares of
(pound)1 each, 6,207 Ordinary "B"
Shares of (pound)1 each and 4,137
Ordinary "C" Shares of (pound)1 each
Issued share capital: (pound)181,929 divided into 4,400,000
Preference Shares of 1p each, 100,000
Preferred Ordinary Shares of (pound)1
each, 27,585 Ordinary "A" Shares of
(pound)1 each, 6,207 Ordinary "B"
Shares of (pound)1 each and 4,137
Ordinary "C" Shares of (pound)1 each
<TABLE>
<CAPTION>
INVESTORS 1P (POUND)1 "A" (POUND)1 "B" (POUND)1 "C" (POUND)1
PREFERENCE ORDINARY ORDINARY ORDINARY PREFERRED
<S> <C> <C> <C> <C> <C>
NatWest Ventures
Nominees Limited 2,444,444 - - - 55,556
Phoenix General Partner
Limited 1,929,899 - - - 43,861
Compass Representatives
Limited 25,657 - - - 583
Alastair Morrison - 16,551 - - -
Richard Bethell - 11,034 - - -
David Abbot - - - 1,379 -
Noel Philp - - 1,034 2,068 -
William Daniell - - 2,069 - -
Alan Golacinski - - 2,069 - -
Mikhail Golovatov - - 1,035 - -
Paul Beat - - - 138 -
Roger Brown - - - 138 -
Chris Disney - - - 138 -
Jonathan Garratt - - - 138 -
David de Stacpoole - - - 138 -
TOTALS 4,400,000 27,585 6,207 4,137 100,000
</TABLE>
Directors: Alastair Morrison
Richard Bethell
Martin Brayshaw
Charles Mackay
Hugh Lenon
John Hustler
D Ramsbotham
Secretary: Martin Brayshaw
Auditors: KPMG
- 28 -
<PAGE>
Accounting reference date: 31 December
- 29 -
<PAGE>
SCHEDULE 3
PARTICULARS RELATING TO THE SUBSIDIARIES
Name: DSL HOLDINGS LIMITED
Jurisdiction of incorporation: England and Wales
Registered no: 2488312
Date of incorporation: 3 April 1990
Registered office: Egginton House
25-28 Buckingham Gate
London SW1E 6LD
Authorised share capital: (pound)1,000,000 divided into 1,000,000
deferred shares of (pound)1 each and
$4,666.68 divided into 466,668
ordinary shares of $0.01 each
Issued share capital:
(pound)466,668 divided
into divided into
466,668 ordinary
shares of (pound)1
each and $4,666.68
divided into 466,668
ordinary shares of
$0.01 each
Registered in the name of: DSL Group Limited (deferred only;
ordinary shares are bearer shares)
Beneficially owned by: DSL Group Limited
Directors: Richard Bethell
Alastair Morrison
Martin Brayshaw
David Abbot
Noel Philp
William Daniell
Alan Golacinski
Mikhail Golovatov
Secretary: John Hustler
Auditors: KPMG
Accounting reference date: 31 December
- 30 -
<PAGE>
Name: BROOKSIGHT LIMITED
Jurisdiction of incorporation: England and Wales
Registered no: 1269266
Date of incorporation: 16 July 1976
Registered office: Egginton House
25-28 Buckingham Gate
London SW1E 6LD
Authorised share capital: (pound)10,000 divided into 10,000
ordinary shares of(pound)1 each
Issued share capital: (pound)10,000 divided into 10,000
ordinary shares of(pound)1 each
Registered in the names of: Name Number
DSL Holdings Limited 9,999
Alastair Morrison 1
Beneficially owned by: DSL Holdings Limited
Directors: Alastair Morrison
Peter Tawell
Secretary: John Hustler
Auditors: KPMG
Accounting reference date: 31 December
- 31 -
<PAGE>
Name: DEFENCE SYSTEMS INTERNATIONAL LIMITED
Jurisdiction of incorporation: England and Wales
Registered under no: 1541457
Date of incorporation: 26 January 1981
Registered office: Egginton House
25-28 Buckingham Gate
London SW1E 6LD
Authorised share capital:
(pound)530,000 divided
into 60,000 A ordinary
shares of (pound)1
each, 420,000 B
ordinary shares of
(pound)1 each and
50,000 5% cumulative
redeemable preference
shares of (pound)0.10
each
Issued share capital:
(pound)470,882 divided
into 5,000 A ordinary
shares of (pound)1
each, 415,882 B
ordinary shares of
(pound)1 each and
50,000 5% cumulative
redeemable preference
shares of (pound)0.10
each
Registered in the names of: Name No and class
DSL Holdings Limited 4,999
A ordinary shares
415,882
B ordinary shares
50,000
preference shares
Alastair Morrison 1
A ordinary share
Beneficially owned by: DSL Holdings Limited
Directors: Alastair Morrison
Richard Bethell
Secretary: John Hustler
Auditors: KPMG
Accounting reference date: 31 December
- 32 -
<PAGE>
Name: DEFENCE SYSTEMS LIMITED
Jurisdiction of incorporation: England and Wales
Registered no: 1540857
Date of incorporation: 16 July 1981
Registered office: Egginton House
25-28 Buckingham Gate
London SW1E 6LD
Authorised share capital: (pound)1,000,000 divided into 1,000,000
ordinary shares of(pound)1 each
Issued share capital: (pound)1,000,000 divided into 1,000,000
ordinary shares of(pound)1 each
Registered in the names of: Name Number
Defence Systems International
Limited 999,999
Alastair Morrison 1
Beneficially owned by: Defence Systems International Limited
Directors: David Abbot
Alastair Morrison
Richard Bethell
Noel Philp
Secretary: John Hustler
Auditors: KPMG
Accounting reference date: 31 December
- 33 -
<PAGE>
Name: DEFENSE SYSTEMS (JERSEY) LIMITED
Jurisdiction of incorporation: Jersey
Registered no: 62148
Date of incorporation: 9 June 1995
Registered office: PO Box 197
7 Esplanade
St Helier
Jersey JE4 8RT
Authorised share capital: (pound)10,000 divided into 10,000 shares
of(pound)1 each
Issued share capital: (pound)2 divided into 2 shares of (pound)
1 each
Registered in the name of: Name Number
Hanon I Limited 1
Hanon II Limited 1
Beneficially owned by: Defence Systems Limited
Directors: Noel Philp
Terence O'Neill
Richard Bethell
Secretary: Hambros Channel Islands Trust
Corporation Limited
Auditors: KPMG
Accounting reference date: 31 December
- 34 -
<PAGE>
Name: US DEFENSE SYSTEMS INCORPORATED
Jurisdiction of incorporation: Delaware, USA
Employer identification no: 13-3314425
Date of incorporation: 1 November 1985
Registered office: 1835 K Street
N.W.
Suite 600
Washington D.C. 20006-1203
Authorised share capital: $1,010 divided into 1,000 shares of
preferred stock of $1 par value each
and 1,000 shares of common stock of
$0.01 par value each
Issued share capital: $3 divided into 300 shares of common
stock of $0.01 par value each
Registered in the name of: Defence Systems International Limited
Beneficially owned by: Defence Systems International Limited
Directors: Alastair Morrison
Alan Golacinski
Buster Glosson
Secretary: Christopher Disney
Auditors: KPMG
Accounting reference date: 31 December
- 35 -
<PAGE>
Name: DSL SECURITY (ASIA) PTE LIMITED
Jurisdiction of incorporation: Singapore
Registered no: 19880275817
Date of incorporation: 8 August 1988
Registered office: Block 305 #02-167
Ubi Avenue 1
Singapore 400305
Authorised share capital: S$100,000 divided into 100,000 shares of
$1 each
Issued share capital: S$100,000 divided into 100,000 shares of
$1 each
Registered in the name of: DSL Holdings Limited
Beneficially owned by: DSL Holdings Limited
Directors: Terence O'Neil
Noel Philp
Alastair Morrison
Secretary: Chor Pee (solicitors)
Auditors: KPMG
Accounting reference date: 31 December
- 36 -
<PAGE>
Name: DSL SECURITY SYSTEMS (SOUTH AFRICA)
(PTY) LIMITED
Jurisdiction of incorporation: South Africa
Registered no: 95/09168/07
Date of incorporation: 30 August 1995
Registered office: c/o Syfret Godlonton-Fuller Moore
Incorporated
11th Floor
NBS Waldorf
80 St George's Mall
Cape Town 8001
South Africa
Authorised share capital: Rand 1,000 divided into 1,000 ordinary
shares of Rand 1 each
Issued share capital: Rand 60 divided into 60 ordinary shares
of Rand 1 each
Registered in the names of: [ ]
Beneficially owned by: DSL Security (Asia) Pte Limited
Directors: Alastair Morrison
Richard Bethell
Public officer: Colleen Vetch
Auditors: KPMG Aiken & Peat
Accounting reference date: 31 December
- 37 -
<PAGE>
Name: US DS ZAIRE SARL
Jurisdiction of incorporation: Zaire
National ID no: K28145C
Commercial registration no: 34758
Date of incorporation: November 1992
Registered office: 191 Avenue de L'Equateur
Kinshasa
Combe
Zaire
Authorised share capital: 10,000,000,000 Old Zaires divided into
[ ]
Issued share capital: 10,000,000,000 Old Zaires divided into
[ ]
Registered in the names of: Name Percentage
US Defense Systems Inc 99
Risasi Msimbwa 1
Beneficially owned by: US Defense Systems Inc.
Directors: Risasi Msimbwa (power of attorney has
been granted to Mr Garratt which
enables him to sign on behalf of the
board and on behalf of shareholders)
Secretary: Sofikin (unofficially because no
requirement for a secretary)
Auditors: Audited through US Defense Systems Inc
Accounting reference date: 31 December
- 38 -
<PAGE>
Name: SOCIETE AFRICAINE DE PERSONNEL DE
LOGISTIQUE ET DE LIASON SARL
Jurisdiction of incorporation: Zaire
National ID no: A48686U
Commercial registration no: 27067
Date of incorporation: September 1992
Registered office: 191 Avenue l'Equateur
Kinshasa
Combe
Zaire
Authorised share capital: 5,000,000,000 Old Zaires divided into
[ ]
Issued share capital: 5,000,000,000 Old Zaires divided into
[ ]
Registered in the names of: Name Percentage
Defence Systems Limited 99
Risasi Msimbwa 1
Beneficially owned by: Defence Systems Limited
Directors: Dr Samuel Shoubma
Secretary: Sofikin (unofficially because no
requirement for a secretary)
Auditors: through DSL/KPMG
Accounting reference date: 31 December
- 39 -
<PAGE>
Name: DEFENCE SYSTEMS COLUMBIA SA
Jurisdiction of incorporation: Columbia
Registered no: 304160
Date of incorporation: 23 July 1987
Registered office: Carrera 14 No. 87-36
Santafe de Bogota
Columbia
Authorised share capital: Columbian Pesos 300,000,000 divided into
300,000 shares of 1,000 Columbian Pesos
each
Issued share capital: Columbian Pesos 190,000,000 divided into
190,000 shares of 1,000 Columbian Pesos
each
Registered in the names of: Name Number
DSL Holdings Limited 179,550
Alastair Morrison 1,900
Richard Bethell 1,900
William Daniell 1,900
Norman Weston 4,750
Beneficially owned by: DSL Holdings Limited
Directors: William Daniell
Harnando Galindo
Norman Weston
Richard Bethell
Roger Brown
Secretary: Mauricio Lopez
Auditors: KPMG
Accounting reference date: 31 December
- 40 -
<PAGE>
Name: DSL (OVERSEAS) LIMITED
Jurisdiction of incorporation: Cyprus
Registered no: 56708
Date of incorporation: 4 August 1993
Registered office: Elma House
10 Mnasiadou Street
Nicosia
Cyprus
Authorised share capital: C(pound)1,000 divided into 1,000
ordinary shares of C(pound)1 each
Issued share capital: C(pound)1,000 divided into 1,000
ordinary shares of C(pound)1 each
Registered in the name of: Name Number
Harry Clerides 1
Defence Systems Limited 999
Beneficially owned by: Defence Systems Limited
Directors: Richard Bethell
David Abbot
Secretary: Kypros Charalambides
Auditors: KPMG
Accounting reference date: 31 December
- 41 -
<PAGE>
Name: GORANDEL TRADING LIMITED
Jurisdiction of incorporation: Cyprus
Registered no: 56442
Date of incorporation: 21 July 1993
Registered office: Elma Building
10 Mnasiadou Street
Nicosia
Cyprus
Authorised share capital: C(pound)1,000 divided into 1,000 shares
of C(pound)1 each
Issued share capital: C(pound)1,000 divided into 1,000 shares
of C(pound)1 each
Registered in the names of: Name Number
DSL Overseas Limited 500
Strontian Holdings Limited 500
Beneficially owned by: Name Number
DSL Overseas Limited 500
Strontian Holdings Limited 500
Directors: David Abbot
Richard Bethell
Igor Orekhov
Mikhail Golovatov
Secretary: Kypros Charalambides
Auditors: KPMG
Accounting reference date: 31 December
- 42 -
<PAGE>
Name: JARDINE SECURICOR GURKHA SERVICES LIMITED
Jurisdiction of incorporation: Hong Kong
Registered under no: 401004
Date of incorporation: 2 February 1993
Registered office: The Security Centre
481-483 Castle Peak Road
Cheung Sha Wan
Kowloon
Authorised share capital: HK$10,000 divided into 10,000 shares of
HK$1 each
Issued share capital: HK$10,000 divided into 10,000 shares of
HK$1 each
Registered in the names of: Name Number
Jardine Securicor Limited 6,200
Maximum Security Asia Limited 2,000
Defence Systems Limited 2,000
Beneficially owned by: Name Number
Jardine Securicor Limited 6,200
Maximum Security Asia Limited 2,000
Defence Systems Limited 2,000
Directors: Alastair Morrison
[3 appointed by Jardine Securicor
Limited]
[2 appointed by Maximum Security Asia
Limited]
Secretary: N/A
Auditors: Price Waterhouse
Accounting reference date: 30 September
- 43 -
<PAGE>
Name: DSL SECURITY (PNG) PTE
Jurisdiction of incorporation: Papua New Guinea
Registered no: C8303
Date of incorporation: 1 August 1981
Registered office: Second Floor
Mogoru
Moto Building
Champion Parade
Port Moresby NCD
Authorised share capital: K10,000 divided into 10,000 ordinary
shares of K1 each
Issued share capital: K1,000 divided into 1,000 ordinary
shares of K1 each
Registered in the names of: Name Number
Defence Systems Limited 500
Kramer Consultants Pty Limited 500
Beneficially owned by: Name Number
Defence Systems Limited 500
Kramer Consultants Pty Limited 500
Directors: Frank Kramer
Noel Philp
Alastair Morrison
Secretaries: Frank Kramer
David Wardley (KPMG)
Auditors: KPMG
Accounting reference date: 31 December
- 44 -
<PAGE>
Name: DSL - SESEGEUR PERU SA
Jurisdiction of incorporation: Peru
Registered no: 119996
Date of incorporation: 20 February 1995
Registered office: Mercantile Registry
Lima
Peru
Authorised share capital: S/.4,000 divided into 20 'A' class
shares of S/.100 each and 20 'B' class
shares of S/.100 each
Issued share capital: S/.4,000 divided into 20 'A' class
shares of S/.100 each and 20 'B' class
shares of S/.100 each
Registered in the name of: Defence Systems Peru - SESEGUR SA
Beneficially owned by: Name No and class
Augusto Gabaldoni
Fort 6 'A' class shares
Augusto Gabaldoni
Mujica 7 'A' class shares
Santiago Gabaldoni
Mujica 7 'A' class shares
Defence Systems
Limited 20 'B' class shares
Directors: Richard Bethell
William Daniell
Augusto Gabaldoni Mujica
Santiago Gabaldoni Mujica
Secretary and general manager: Augusto Gabaldoni Mujica
Auditors: [ ]
Accounting reference date: 31 December
- 45 -
<PAGE>
Name: DEFENSETSE SYSTEMS EQUADOR USDSE SA
Jurisdiction of incorporation: Equador
Registered no: 0544
Date of incorporation: [ ]
Registered office: Edificio Metropoli, 502
Borja Cavayen y Nunez Vela
Quito
Equador
Authorised share capital: $10,000,000 divided into 10,000 shares
of $1,000 each
Issued share capital: $10,000,000 divided into 10,000 shares
of $1,000 each
Registered in the names of: Name No of shares
US Defense Systems Inc 9,999
Paola Morales 1
Beneficially owned by: US Defense Systems Inc
Directors: Alan Golacinski
Alastair Morrison
Secretary: Christopher Disney
Auditors: Juan Galvez (accountant)
Accounting reference date: 31 December
- 46 -
<PAGE>
Name: FAR EAST DEFENCE SYSTEMS LIMITED
(in creditors voluntary liquidation)
Jurisdiction of incorporation: Hong Kong
Registered no: 1269266
Date of incorporation: 24 May 1988
Registered office: Prince's Building
8th Floor
GPO Box 50
Hong Kong
Authorised share capital: S$250,000
Issued share capital: [ ]
Registered in the names of: Name No of shares
DSL Holdings Limited
John Skinner Wilson
Beneficially owned by: DSL Holdings Limited
Director: Alastair Morrison
Secretary: [ ](Solicitors)
Liquidator: Mick Bond, KPMG
Auditors: KPMG
Accounting reference date: 31 December
Note: Final meeting of members and creditors has been convened for 15 April
1997. The company will be struck off three months from that date.
- 47 -
<PAGE>
Name: USDS (MED) LIMITED
Jurisdiction of incorporation: Cyprus
Registered no: 32826
Date of incorporation: 2 August 1988
Registered office: Julia House
3 Th Dervis Street
PO Box 3585 Nicosia
Cyprus
Authorised share capital: C(pound)10,000 divided into 10,000
shares of C(pound)1 each
Issued share capital: C(pound)1,000 divided into 1,000 shares
of C(pound)1 each
Registered in the names of: Name No of shares
Defence Systems
International Limited 400
Magenta Holdings Limited 300
Antonius J Vouros Limited 300
Beneficially owned by: Defence Systems International Limited
Directors: Alastair Morrison
Richard Bethell
A Ridgeway
A Vouros
Secretary: Coly Secretarial Limited
Liquidator:
Auditors: Coopers & Lybrand
Accounting reference date: 31 December
Note: Registrars of Companies (Cyprus) requested to strike the company off in
November 1996, with such strike-off expected in July 1997.
- 48 -
<PAGE>
Name: MAXIMUM SECURITY INDOCHINA LIMITED
Jurisdiction of incorporation: Hong Kong
Registered no:
Date of incorporation:
Registered office:
Authorised share capital:
Issued share capital:
Registered in the names of: Name No of shares
Beneficially owned by: DSL Security (Asia) Pte Limited (20%
only)
Director:
Secretary:
Auditors:
Accounting reference date:
- 49 -
<PAGE>
SCHEDULE 4
WARRANTIES
1. Constitution
2. Accounts
3. Business
4. Directors and Employees
5. Properties
6. The Group and its Bankers
7. Accuracy of Information/Reports
- 50 -
<PAGE>
1. CONSTITUTION
1.1 CONSTITUTIONAL DOCUMENTS
The memorandum and articles of association or other constitutional
documents of the Company in the form attached to the Disclosure
Letter are complete and accurate and have embodied therein or
annexed thereto copies of all resolutions and agreements as are
required by law to be embodied therein or annexed thereto and all
amendments thereto (if any) were duly and properly made.
1.2 REGISTER OF MEMBERS
The register of members of the Company contains true and accurate
records of the members from time to time of the Company and the
Company has not been subject to any application under any relevant
legislation for rectification of such register.
1.3 RETURNS
All such resolutions returns and other documents required by law to
be delivered to the Registrar of Companies have been duly delivered
and are true and accurate.
1.4 POWERS OF ATTORNEY
The Company has not executed any power of attorney or conferred on
any person other than its directors, officers and employees any
authority to enter into any transaction on behalf of or to bind the
Company in any way.
1.5 SUBSIDIARIES
1.5.1 The Company does not have any subsidiary undertakings other than as
noted in schedule 3 nor does the Company own any shares or stock in
the capital of nor have any beneficial interest in any other company
or business organisation nor does the Company control or take part
in the management of any other company or business organisation.
1.5.2 Each of the Subsidiaries is a wholly-owned subsidiary of the
Company, save as otherwise indicated in schedule 3.
- 51 -
<PAGE>
2. ACCOUNTS
2.1 ACCOUNTS WARRANTY
The Accounts comply with the relevant legislation of the
jurisdiction of incorporation of the Company as applicable and have
been prepared in accordance with generally accepted accounting
principles and practices of such jurisdiction and give a true and
fair view of all the assets and liabilities and of the financial
position and results of the Company as at and up to the Accounts
Date and, without prejudice to the generality of the foregoing, the
Accounts:-
(a) either make adequate provision or reserve for or make fair
disclosure in notes of all contingent, postponed or
deferred liabilities;
(b) have not (save as disclosed in the Accounts) been affected
by any extraordinary, exceptional or non-recurring item or
by any other fact or circumstance rendering the profits or
losses for the relevant period unusually high or low.
2.2 ACCOUNTING POLICY
The Accounts have been prepared in accordance with the accounting
policies adopted by the Company as at 31 March 1996.
2.3 DEBT FINANCING
None of the debts owed to the Company has been the subject of any
factoring by the Company.
2.4 MANAGEMENT ACCOUNTS
The monthly management accounts of the Company for the period since
31 December 1996 up to and including 28 February 1997 in the form
attached to the Disclosure Letter and indentified by means of
cross-reference:-
(a) show a fair view of the affairs of the Company for periods
to which they relate it being acknowledged by AHI that the
management accounts are not audited;
(b) do not overstate assets or profits or understate
liabilities or losses to a material extent; and
(c) are not misleading in any material respect.
2.5 FIXED ASSETS
The value of all of the fixed assets of the Company as shown in the
Accounts is at cost thereof less depreciation deducted from time to
time in a consistent manner and there has been no revaluation of
such fixed assets since their acquisition.
- 52 -
<PAGE>
2.6 OFF BALANCE SHEET FINANCING
Neither the Company nor any associated company has engaged in any
financing (including without prejudice to the generality of the
foregoing the incurring of any borrowing or any indebtedness in the
nature of borrowing including without limitation liabilities in the
nature of acceptances or acceptance credits) of a type which would
not be required to be shown or reflected in the Accounts.
2.7 ACCOUNTING REFERENCE DATE
The Company has notified to the Registrar of Companies the date
specified against "Accounting reference date" in the relative
section of Schedule 2 or 3 (as appropriate) as being its accounting
reference date pursuant to the relevant legislation in the
jurisdiction of incorporation of the Company.
2.8 BOOKS OF ACCOUNT AND CORPORATE RECORDS
2.8.1 The Company has properly kept and maintained all necessary books of
account all minute books, records, register of members and other
statutory books.
2.8.2 All material deeds and documents (properly stamped where stamping is
necessary for enforcement thereof) belonging to the Company or which
ought to be in the possession of the Company and which are material
to the conduct of its business, including, without limitation:-
(a) all certificates of incorporation, statutory books and
share certificate books relating to the Company;
(b) all material land certificates, charge certificates,
leases, title deeds and other documents relating to the
Properties;
(c) all material insurance policies in any way relating to or
concerning the businesses of the Company; and
(d) all material licences, consents, permits and
authorisations obtained by or issued to the Company or any
officer or employee thereof in connection with the
business carried on by it
are in the possession of the Company.
- 53 -
<PAGE>
3. BUSINESS
3.1 BUSINESS SINCE THE ACCOUNTS DATE
Since the Accounts Date the business of the Company has been
conducted in the ordinary course of trading, there has been no
material adverse change in the financial or trading position of the
Company and the business of the Company has been conducted on a
normal basis and the Company has not disposed of any of its assets
to any Vendor or any person connected (within the meaning of section
839 T.A.) with a Vendor or otherwise than in the normal course of
business or declared or paid any dividend on any of its Shares or
effected any distribution of its assets or made any loan or other
payment other than in the normal course of business.
3.2 CHARGES AND TITLE TO ASSETS
3.2.1 The Company has not created or agreed to create or suffered to arise
any Encumbrance over any part of its undertaking or assets and the
Company has a good and marketable title to all the assets included
in the Accounts and to all other assets (tangible or intangible)
used for the purpose of the Company's business at the date hereof
and to all assets acquired since the Accounts Date and prior to
Completion.
3.2.2 No person other than the Company has any right, title or interest
(present or future) in any asset of the Company.
3.3 CONTRACTS
3.3.1 Full and accurate details of any bill of sale or any hiring or
leasing agreement, hire purchase agreement, credit or conditional
sale agreement, agreement for payment on deferred terms or any other
similar agreement to which the Company is a party are contained in
the Disclosure Letter.
3.3.2 The Disclosure letter contains reasonable details of all subsisting
contracts to which the Company is a party and which:-
(a) is expected to generate aggregate revenue to the Company
of more than (pound)250,000:
(b) are outside the ordinary course of business of the
Company;
(c) are incapable of termination in accordance with their
terms, by the Company, on six months' notice or less;
(d) are of a loss-making nature (that is, a contract with a
direct contract contribution of less than 10 per cent
excluding any local overhead allocation);
(e) cannot readily be fulfilled or performed by the Company on
time without undue, or unusual, expenditure of money,
effort or personnel in the context of the business of the
Company or which could give rise to monetary penalties;
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<PAGE>
(f) involve an aggregate capital expenditure by the Company
during any twelve month period of more than $100,000;
(g) restrict its freedom to engage in any activity or business
or confine its activity or business to a particular place;
or
(h) are capable of termination (without liability for
compensation) by any other person on a change in the
management control or shareholding of the Company or by
reason of the sale of the Shares under this agreement
and the Disclosure Letter specifically identifies which of such
contracts are disclosed against which of the above paragraphs of
this Warranty.
3.3.3 Each of the contracts referred to in Warranty 3.3.2 is in full force
and effect and not voidable.
3.3.4 The Company has not been notified of, and the Warrantors are not
aware of, any breach by the Company of any of its obligations under
any contract to which it is a party or by which it is bound.
3.3.5 Subsequent to Completion the Company will not have any contractual
or other arrangements of any sort with any of the Vendors or any
body corporate or person connected or associated with any of the
Vendors.
3.4 EVENTS OF DEFAULT
So far as the Warrantors are aware, no event has occurred or is
subsisting which constitutes or results in or would with the giving
of notice and/or lapse of time constitute or result in a default or
the acceleration of any obligation under any agreement or
arrangement to which the Company is a party or by which it or any of
its properties, revenues or assets are bound.
3.5 CHANGE OF CONTROL
To the best of the Warrantors' knowledge, information and belief,
after Completion as a result of the proposed acquisition of the
Company by AHI:-
(a) no customer of the Company will cease, or be entitled to
cease, to deal with the Company or may substantially
reduce its existing level of business with the Company;
(b) no officer or senior employee of the Company will leave.
3.6 MATERIAL CUSTOMERS
The Disclosure Letter contains full details of all former customers
who accounted for annual billings of more than $500,000 of the
Company who have ceased to be customers of the Company or have
materially reduced their business with the Company in each case in
the 12 months prior to Completion.
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<PAGE>
3.7 GUARANTEES ETC.
The Company has not given any guarantee, indemnity, warranty or bond
or incurred any other similar obligation or created any security for
or in respect of liabilities, actual or contingent, of any other
person.
3.8 OPTIONS OVER SHARES ETC.
Since the Accounts Date no share or loan capital has been created or
issued or agreed to be created or issued and there are not any
options or other agreements outstanding which call or give any
person the right to call (whether or not subject to conditions) for
the issue of any share or loan capital of the Company and none of
the Vendors is under any obligation of any kind whatsoever whether
actual or contingent to sell, charge or otherwise dispose of any of
the Shares or any interest therein to any other person.
3.9 LITIGATION
3.9.1 The Company is not engaged in any litigation, arbitration,
prosecution or other legal proceedings (whether as plaintiff,
defendant or third party), the Company has not been notified that
any such proceedings are pending or threatened and so far as the
Warrantors are aware there are no claims, facts or events which
should reasonably be expected to give rise to any such proceedings.
3.9.2 The Company is not engaged in and has not in the last three years
been engaged in and so far as the Warrantors are aware no facts or
events exist or have occurred which are likely to cause the Company
to be involved in proceedings or enquiries before any governmental
or municipal board of enquiry or commission or any other
administrative body (whether judicial quasi-judicial or otherwise)
in which any unfavourable judgment or decision would or should
reasonably be expected to affect materially and adversely the
business of the Company.
3.10 TRADE MARKS ETC.
3.10.1 The Company has sufficient right, title and ownership of all its
intangible property, including all patents, trade marks, service
marks, trade names, copyrights, licences, information and
proprietary rights ("PROPRIETARY RIGHTS"), or adequate licences,
rights or purchase options with respect to the foregoing, necessary
for its business as now conducted, and the Company has not received
any notice of infringement upon or conflict with the asserted rights
of others.
3.10.2 The trade marks, service marks, patents, registered designs and
copyrights and other intellectual property rights (and applications
for registration of the same) particulars of which are set out in
the Disclosure Letter are beneficially owned by, and where
registrable, are registered in the name of the Company listed as the
owner of such right or assets free from any Encumbrance and there
are no registered user agreements, know-how agreements, licences or
other rights whatsoever granted in respect thereof and, so far as
the Warrantors are aware, no event has occurred whereby any of them
have or might cease to be valid and subsisting.
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<PAGE>
3.10.3 So far as the Warrantors are aware the Company has conducted its
business without infringing the Proprietary Rights of any person.
3.11 PROPERTY IN OTHER COMPANIES
The Company is not liable to offer for sale transfer or otherwise
dispose of or purchase or otherwise acquire any assets, including
shares held by it in other bodies corporate under their articles of
association or any agreement or arrangement or to take or suffer any
action upon the happening of any such event specified in warranty
3.8.
3.12 INSURANCE
3.12.1 The Company has produced to AHI copies of all insurance policies in
effect in relation to its business and assets and all such policies
are in full force and effect and not voidable.
3.12.2 So far as the Warrantors are aware there are no circumstances which
might reasonably be expected to lead to any liability under such
insurance being avoided by the insurers and the Company has not
received notice that there is any claim outstanding under any such
policy nor are the Warrantors aware of any circumstances likely to
give rise to a claim.
3.12.3 The Disclosure Letter includes a summary with reasonable details of
all claims made under the insurance policies of the Company in the
three years prior to Completion.
3.13 COMPLIANCE WITH LEGISLATION
3.13.1 The Company has not received notice that it or any of its officers,
agents or employees (during the course of their duties in relation
to the Company) have committed, or omitted to do, any act or thing
the commission or omission of which is, or could be, in
contravention of any Act, order, regulation or the like which is
punishable by fine or other penalty or which may impose any other
liabilities on the Company or affect the validity or enforceability
of any agreement or arrangement to which it is a party and which
would be material to the Company.
3.13.2 Without prejudice to the generality of the foregoing, the Company
has received no notice that it has done or omitted to do any act or
thing in contravention of the provisions of the Restrictive Trade
Practices Acts 1976 and 1977, the Fair Trading Act 1973, the
Competition Act 1980, Articles 85 and 86 of the Treaty of Rome, the
Resale Prices Act 1976, the Trade Descriptions Act 1968, the
Consumer Credit Act 1974, the Consumer Protection Act 1989, the
Companies Act 1985, the Financial Services Act 1986, the Banking Act
1987, the Food Safety Act 1990 and the United States Foreign Corrupt
Practices Act and so far as the Warrantors are aware all statutory,
municipal and other like requirements (including orders and
regulations affecting businesses carried on in member states of the
European Economic Community) applicable to the business of the
Company have been complied with in all material respects.
3.13.3 The Warrantors are not aware of any proposed or pending changes in
law or regulation which would have a material adverse effect on the
business of the Company.
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<PAGE>
3.14 LICENCES
So far as the Warrantors are aware, the Company has all licences,
permissions, permits, consents and authorisations required for the
carrying on of its business and which the failure to have would have
a material adverse effect on the Company, the Company has not
received notice that it is in breach of the terms or conditions of
such licences, permissions, permits, consents and authorisations and
so far as the Warrantors are aware, there are no pending or
threatened proceedings which should reasonably be expected to affect
in any way such licences, permissions, permits, consents and
authorisations and the Warrantors are not aware of any other reason
why any of them should be suspended, threatened or revoked or be
invalid.
3.15 GRANTS
The Company has not received any financial assistance from any
supranational, national or local agency, body or authority which
will become repayable as a result of the purchase by AHI of the
Ordinary Shares.
3.16 INSOLVENCY
The Company is able to pay its debts as they fall due, is not
insolvent and no steps have been taken nor are the Warrantors aware
of any grounds on which any steps could be taken to appoint any
receiver, administrator or liquidator in respect of the Company or
any of its assets.
3.17 TAX
3.17.1 So far as the Warrantors are aware, the Company will not suffer any
liability to Tax other than:-
(a) Tax the liability for which was provided for or expressly
taken into account in the preparation of the Accounts; or
(b) Tax arising in the ordinary course of the Company's trade
since the Accounts Date
in consequence of any act or omission occurring or any profits
arising (or deemed for Tax purposes to arise) on or before
Completion.
3.17.2 So far as the Warrantors are aware, the Company has made all returns
and supplied all information and given all notices to all relevant
authorities having competence in relation to Tax as reasonably
requested or required by law within any requisite period and all
such returns and information and notices are correct and accurate in
all material respects and are not the subject of any dispute and
there are no facts or circumstances likely to give rise to or be the
subject of any such dispute.
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<PAGE>
4. DIRECTORS AND EMPLOYEES
In this section 4, "SENIOR EMPLOYEE" means an employee of the Company whose
total annual remuneration at the date hereof exceeds (pound)40,000.
4.1 The names and addresses of Directors and Secretaries shown in
schedules 1, 2 and 3 are true and complete and no person not named
therein as such is a director of the Company.
4.2 The particulars of all employees annexed to the Disclosure Letter
show all remuneration and other benefits:-
(a) actually provided; and
(b) which the Company is bound to provide (whether now or in
the future)
to each officer and senior employee of the Company and are true and
complete and include particulars of and details of participation in
all profit sharing, incentive, bonus, commission, share option,
medical, permanent health insurance, directors and officers
insurance, travel, car, redundancy and other benefit schemes,
arrangements and understandings (the "SCHEMES") operated for all or
any employees or former employees of the Company or their dependants
whether legally binding on the Company or not.
4.3 The Schemes have at all times been operated in accordance with their
governing rules or terms and all applicable laws and all documents
which are required to be filed with any regulatory authority have
been so filed and, so far as the Warrantors are aware, all tax
clearances and approvals necessary to obtain favourable tax
treatment for the Company and/or the participants in the Schemes
have been obtained and not withdrawn and no act or omission has
occurred which has or could prejudice any such tax clearance and/or
approval.
4.4 The terms of employment or engagement of all employees, agents,
consultants and professional advisers of the Company are such that
their employment or engagement may be terminated by not more than 12
months' notice given at any time without liability for any payment
including by way of compensation or damages (except for unfair
dismissal or a statutory redundancy payment).
4.5 Since the Accounts Date the Company has not made, announced or
proposed any changes to the emoluments or benefits of or any bonus
to any of its directors, officers or senior employees and the
Company is under no obligation to make any such changes with or
without retrospective operation.
4.6 The Disclosure Letter contains copies of and full details of all
rights and liabilities relating pursuant to any collective
agreements (whether with a trade union, staff association or any
other body representing workers and whether legally binding or not)
concerning the Company.
4.7 There are no amounts owing or agreed to be loaned or advanced by any
of the Vendors or by the Company to any directors, officers and
employees of the Company (other than amounts representing
remuneration accrued due for the current pay period, accrued holiday
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<PAGE>
pay for the current holiday year, for reimbursement of expenses or
bona fide travel advances).
4.8 No director, officer or senior employee of the Company is at present
under notice to terminate his employment (either given or received).
4.9 There are no terms or conditions under which any director, officer
or expatriate employee of the Company is employed, nor has anything
occurred that should reasonably be expected to give rise to any
material claim against the Company for sex, race or other unlawful
discrimination.
4.10 The salaries and wages and other benefits of all senior employees of
the Company have been paid or discharged in full in respect of the
period up to Completion.
4.11 The only schemes or arrangements to which the Company is a party
whose purpose is the provision of "relevant benefits" (as defined in
section 612 Income and Corporation Taxes Act 1988) are the DSL
(1995) Group Pension Scheme, the DSL Offshore Pension Scheme, the
DSL Directors Special Pension Scheme and the USDS Retirement Plan
(the "PENSION SCHEMES").
4.12 Other than benefits payable on death which are fully insured the
Pension Schemes provide only money purchase benefits (as defined in
section 181 Pension Schemes Act 1993) and no promise or assurance
has been given to any beneficiary of the Pension Schemes that his
benefits other than insured death benefits will be calculated by
reference to any person's remuneration or equate (approximately or
exactly) to any particular amount.
4.13 The Pension Schemes comply with all applicable legal and regulatory
requirements, and have all appropriate governmental and fiscal
approvals, in the appropriate jurisdiction and the Vendors are not
aware of any outstanding claims or litigation (including complaints
to the Pensions Ombudsman) in respect of the Pension Scheme, nor of
any circumstances likely to give rise to any such claims or
litigation, or likely to prejudice such approval.
4.14 The Company is under no obligation to contribute to any personal
pension scheme.
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<PAGE>
5. PROPERTIES
5.1 The Properties comprise all the freehold and leasehold land owned
used or occupied by the Company and all the rights vested in and all
agreements whereby the Company has any financial entitlement or
obligation (whether actual or contingent) relating to any land at
the date hereof.
5.2 The Company has under its control all title deeds and documents
necessary to prove its title to the Properties and the same are
original documents or properly examined abstracts.
5.3 There are no agreements, covenants, restrictions, exceptions,
reservations, conditions, rights, privileges or stipulations
affecting the Properties which are financially onerous to a material
extent.
5.4 The Company has duly performed observed and complied with all
covenants, restrictions, exceptions, reservations, conditions,
agreements, statutory and common law requirements, by-laws, orders,
building regulations and other stipulations and regulations
affecting the Properties and where appropriate the Company has
obtained a fire certificate for all the Properties.
5.5 Each of the Properties which is leasehold is held under the lease
brief details of which are set out in the Disclosure Letter and no
licences or collateral arrangements or concessions have been entered
into or granted and there are no rent reviews which are in the
course of being determined.
5.6 The Company is in exclusive occupation of each and every part of the
Properties.
5.7 The existing use of each of the Properties is the lawful permitted
use under the relevant planning legislation and in the case of
leasehold property under the terms of the lease or tenancy agreement
under which such property is held or otherwise and are not temporary
uses.
5.8 There are no outstanding enforcement or other notices or proceedings
issued in respect of any of the Properties and there is no
resolution or proposal for compulsory acquisition by the local or
any other authority.
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<PAGE>
6. THE GROUP AND ITS BANKERS
6.1 BANK ACCOUNTS
The most recent statement of each bank account of the Company is
attached to the Disclosure Letter. The Company does not have any
other bank or deposit accounts (whether in credit or overdrawn) not
included in such statements. Since the date to which each such
statement was prepared there have been no payments out of the
relative account except for routine payments.
6.2 EVENTS OF DEFAULT - INDEBTEDNESS
The Company has complied with the original payment schedules in
respect of all and any indebtedness remaining outstanding at
Completion.
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<PAGE>
7. ACCURACY OF INFORMATION
7.1 All information contained in schedules 1, 2, 3 and 5 to this
agreement is true and correct in all material respects.
7.2 All information contained in the Disclosure Letter is true and
correct in all material respects and is not misleading.
7.3 Each answer given to AHI in response to to the Information Request
IN THE AGREED FORM was when given and is now true and correct in all
material respects and so far as the Warrantors are aware no matter
or fact has not been disclosed in response thereto the omission of
which renders any of the answers given misleading in any material
respect.
7.4 So far as the Warrantors are aware, the statements of fact contained
in the schedule IN THE AGREED FORM headed "Exhibit 'A'" are true and
accurate in all material respects and are not misleading in any
material respect.
7.5 The forecasts and projections of the Company for the periods ending
31 December 1997, 1998 and 1999 contained in the schedule IN THE
AGREED FORM headed "Exhibit 'A'" are reasonably believed by the
Warrantors to be reasonable and to be based on reasonable
assumptions all of which are expressed therein.
7.6 So far as the Warrantors are aware, each of the "appropriate
employees" referred to in clause 1.9 has made all reasonable
enquiries as to the subject matter of the enquiries made of him as
to the accuracy of the Warranties and the responses to the
Information Request IN THE AGREED FORM.
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<PAGE>
SCHEDULE 5
THE PROPERTIES
1. ANGOLA
Offices in Luanda
2. BOSNIA
Tranpina Street, No 4
Sarajevo
o Contract in respect of property in dated 21 March 1997
Lessor - Tvornica Carapa "KLJUC" Sarajevo Lessee - Defence
Systems Limited Premises - Offices
Rent - 30 DM per m(2) (1350 DM per month) payable in
advance. Rent subject to review Term - 21 March 1997
onwards effective as long as lessee needs the offices and
the lessor can continue the Lease. The lessor may not
determine the Lease for at least
six months.
3. COLUMBIA
4. ENGLAND
(a) Egginton House
25-28 Buckingham Gate
London SW1E 6LD
o Lease of 7th floor Egginton House Landlord - MEPC plc
Tenant - Advent Limited Term - 26 January 1984 until 24
March 2002
Annual rent - (pound)41,000 payable quaterly in advance on
the usual quater days, subject to review
o Licence for Assignment of Lease dated 13 July 1984 of 7th
floor Egginton House
o Deposit of rent dated 16 October 1990 relating to Lease
dated 13 July 1984 of 7th floor Egginton House
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<PAGE>
o Certificate of registration of Charge created by DSL
Holdings Limited in respect of Lease dated 13 July 1984 of
7th floor Egginton House
o Lease dated 30 July 1984 of 7th floor Egginton House
o Lease dated 23 March 1994 of 5th Floor Egginton House
Landlord - MEPC plc Tenant - DSL Holdings Limited Term - 23
March 1994 until 24 March 2002
Annual rent - Peppercorn rent until 22 February 1995 and
thereafter (pound)30,000 payable quaterly in advance on the
usual quater days, subject to review
o Lease dated 7 June 1996 of Lower Ground Floor Egginton
House Landlord - MEPC plc Tenant - Defence Systems Limited
Term - 7 June 1996 until 24 March 2002 Annual rent -
Peppercorn rent until 6 December 1996 and thereafter
(pound)25,000 payable quaterly in advance on the usual
quater days, not subject to review
o Further documentation (in Portuguese) relating to 7th
floor Egginton House
(b) 16 Palace Street
London SE1
o Licence dated 12 June 1995 re car parking spaces
Grantor - Land Securities plc
Licensee - Defence Systems Limited
Car parking space - 2 car parking spaces at quarterly
licence fee of (pound)1,000 Term - 25 March 1995 to 23 June
1995 may be revoked on any quarter period after the
expiration of this period by not less than one quarters
notice in writing as by either of the parties
(c) Office Studio 2
Horwich Business Centre
o Informal tenancy arrangement
5. JERSEY
Shop 7
Wests Centre
Bath Street
Vingtaine du Haut de la Ville
St Helier
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<PAGE>
Jersey
o Lease
Landlord - Numerical Limited
Tenant - Defence Systems Limited
Term - 1 September 1988 until 23 June 2000
Annual rent - (pound)4,335 payable quaterly in advance on
the usual quater days, subject to review
o Transfer of Lease from Hadrian Management Limited to
Defence Systems Limited dated 19 January 1996.
6. KAZAKHSTAN
o Freehold of a flat
7. KWENHA
8. MOZAMBIQUE
o Informal tenancy arrangement, made by way of letter
Rent - US$388 per month.
9. SINGAPORE
Blk 305 Ubi Avenue
1#02-167
Singapore 400305
o Lease
Landlord - Trend Interior Design & Construction Pte Ltd
Tenant - DSL Security (Asia) Pte Ltd Term - 1 May 1996
until 30 April 1998 Monthly rent - S$1,200 payable in
advance on the first day of each month, not subject to
review
10. UNITED STATES
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<PAGE>
o Lease amendment dated 10 April 1994
Landlord - IPP (Nevada) Inc
Tenant - US Defence Systems Inc
Term - due to end on May 31 1996 with an option to extend
for an additional period of 18 months exercisable by the
tenant by delivering a written notice to the landlord not
more than 12 months nor less than 120 days prior to the
expiration of the term.
Annual rent - $24,354.00
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<PAGE>
SIGNED by )
for and on behalf of )
ARMOR HOLDINGS, INC )
SIGNED by )
for and on behalf of )
ARMOR HOLDINGS LIMITED )
SIGNED by )
for and on behalf of )
NATWEST VENTURES NOMINEES LIMITED )
SIGNED by )
for and on behalf of )
PHOENIX GENERAL PARTNER LIMITED )
SIGNED by )
for and on behalf of )
COMPASS REPRESENTATIVES LIMITED )
SIGNED by ALASTAIR MORRISON )
SIGNED by RICHARD BETHELL )
SIGNED by )
as duly authorised attorney )
for and on behalf of )
ALAN GOLACINSKI )
SIGNED by )
as duly authorised attorney )
for and on behalf of )
WILLIAM DANIELL )
SIGNED by )
as duly authorised attorney )
for and on behalf of )
MIKHAIL GOLOVATOV )
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<PAGE>
SIGNED by )
as duly authorised attorney )
for and on behalf of )
NOEL PHILP )
SIGNED by )
as duly authorised attorney )
for and on behalf of )
DAVID ABBOT )
SIGNED by )
as duly authorised attorney )
for and on behalf of )
JONATHAN GARRATT )
SIGNED by )
as duly authorised attorney )
for and on behalf of )
CHRISTOPHER DISNEY )
SIGNED by )
as duly authorised attorney )
for and on behalf of )
PAUL BEAT )
SIGNED by )
as duly authorised attorney )
for and on behalf of )
DAVID DE STACPOOLE )
SIGNED by )
as duly authorised attorney )
for and on behalf of )
ROGER BROWN )
SIGNED as a DEED and DELIVERED )
by MARTIN BRAYSHAW )
in the presence of:- )
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<PAGE>
CONTENTS
CLAUSE PAGE
1. INTERPRETATION........................................... 1
2. SALE AND PURCHASE ....................................... 5
3. CONSIDERATION............................................ 6
4. COMPLETION............................................... 7
5. WARRANTIES GIVEN BY THE WARRANTORS....................... 9
6. LIMITATION ON LIABILITY IN RESPECT OF THE
WARRANTIES GIVEN BY THE WARRANTORS....................... 12
7. WARRANTIES GIVEN BY AHI AND AHL.......................... 16
8. RESTRICTIONS............................................. 19
9. ANNOUNCEMENTS, ETC....................................... 21
10. COSTS.................................................... 21
11. EFFECT OF COMPLETION..................................... 21
12. ENTIRE AGREEMENT......................................... 21
13. WAIVER, AMENDMENT........................................ 21
14. FURTHER ASSURANCES....................................... 22
15. NOTICES.................................................. 22
16. COUNTERPARTS............................................. 23
17. GOVERNING LAW AND SUBMISSION TO
JURISDICTION............................................. 23
18. INVALIDITY............................................... 23
19. NO RIGHTS OF TERMINATION................................. 23
SCHEDULE 1
The Vendors............................................................ 25
SCHEDULE 2
Particulars relating to the Company.................................... 27
SCHEDULE 3
Particulars relating to the Subsidiaries............................... 28
SCHEDULE 4
Warranties............................................................. 48
SCHEDULE 5
The Properties......................................................... 62
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<PAGE>
Exhibit 10.1
DATED 7 APRIL 1997
------------------
(1) BODYCOTE INTERNATIONAL PLC
(2) ARMOR HOLDINGS LIMITED
TAX DEED
RELATING TO
SUPERCRAFT (GARMENTS) LIMITED
TRAVERS SMITH BRAITHWAITE
10 SNOW HILL
LONDON EC1A 2AL
TEL: 0171-248 9133
FAX: 0171-236 3728
<PAGE>
THIS TAX DEED is made on 7 April 1997
BETWEEN:-
(1) BODYCOTE INTERNATIONAL PLC (the "Covenantor") whose details are set out in
Part I of the Schedule; and
(2) ARMOR HOLDINGS LIMITED (the "Purchaser") whose details are set out in Part
II of the Schedule
WHEREAS this Deed is entered into by the parties pursuant to and supplements
the Agreement
NOW THIS DEED WITNESSES as follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 The following words and expressions where used in this Deed have the
meanings given to them below:-
Agreement the agreement dated between (1)
the Covenantor and (2) Supercraft (Garments)
Limited;
Company Supercraft (Garments) Limited (registered no.
328076) whose registered office is at 140
Kingsway, Manchester M19 1BB;
Event includes any event, transaction, act, occurrence,
or omission of whatever nature, the acquisition,
disposal or realisation of any asset, the making
of any claim relevant for taxation purposes and
Completion;
ICTA 1988 the Income and Corporation Taxes Act 1988;
Input Tax the meaning as ascribed to that phrase by Section
24(1) of the Value Added Tax Act 1994;
Output Tax the meaning as ascribed to that phrase by Section
24(2) of the Value Added Tax Act 1994;
Profits includes income, profits, gains (including capital
gains) or the value of supplies and any other
consideration, value, or receipts used or charged
for taxation purposes;
Relief any relief, exemption, allowance, set-off,
deduction or credit relevant to the computation of
any liability to make a payment of or relating to
Taxation;
Taxation all taxes, duties, charges, levies, imposts or
withholdings whenever and by whatever authority
imposed and whether of the United Kingdom or
elsewhere and whether or not any such taxes,
duties, charges, levies, imposts or withholdings
<PAGE>
- 2 -
are directly or primarily chargeable against or to
the Company together with in any such case all
interest, fines, penalties, surcharges and charges
incidental or relating to the imposing of any of
such taxes, duties, charges, levies, imposts or
withholdings;
Taxation Authority any taxation or other authority (whether within
or outside the United Kingdom) which seeks to
determine liability for and/or administers
Taxation.
1.2 A reference in this Deed to "Liability to Taxation" includes any of the
following:-
1.2.1 a liability to make a payment of or relating to Taxation (an "A
Liability");
1.2.2 the application of all or part of any Relief in computing either
Profits earned, accrued or received on or before Completion or Taxation
arising in respect of any Event on or before Completion in circumstances
where the Relief was not available before Completion but arises in respect
of any Event occurring or period ending after Completion and where but for
such application the Company would have been liable to make a payment of or
relating to Taxation in respect of which the Purchaser would have been able
to make a claim under this Deed (a "B Liability");
1.2.3 the loss or setting off against any liability to make a payment of or
relating to Taxation (for which no provision has been made in preparing the
Completion Accounts and in respect of which but for such loss or setting
off the Purchaser would have been able to make a claim under this Deed) of
all or part of a right to repayment of Taxation which has been treated as
an asset of the Company in preparing the Completion Accounts (a "C
Liability"); and
1.2.4 the loss of all or part of any Relief, or the application of all or
part of any Relief in computing Profits or Taxation (including deferred
taxation), which Relief has been taken into account in computing (and so
reducing) any provision relating to Taxation which appears in the
Completion Accounts (or which but for the presumed availability of such
Relief would have appeared in the Completion Accounts) in circumstances
where the Relief would (were it not for the said loss or application) have
been available in full to the Company (a "D Liability").
1.3 A reference in this Deed to "Tax Assessment" means any notice, demand,
assessment, return, accounts, letter or other document or action taken
indicating that:-
1.3.1 the Purchaser or the Company is or may be placed under a liability to
make a payment of or in respect of Taxation; or
1.3.2 the Company is or may be placed under a liability to repay any amount
paid for the surrender of any group relief or surplus advance corporation
tax or to repay all or part of any payment for a transferred tax refund; or
1.3.3 any Relief or right to repayment of Taxation of or surrendered to the
Company is or may be (whether in whole or in part) lost, set-off or applied
in computing Profits or Taxation;
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1.3.4 any of the assets of the Company or the Purchaser (including any
shares in the Company) are subject to any charge or any power of sale,
mortgage or charge resulting from or in consequence of any liability to
inheritance tax;
in respect of which a claim may be made under this Deed.
1.4 References in this Deed to Profits earned, accrued or received include
Profits deemed to have been or treated as earned, accrued or received for
taxation purposes.
1.5 References in this Deed to Profits being earned, accrued or received on or
before a particular date or in respect of a particular period shall include
Profits deemed for taxation purposes to have been earned, accrued or received
on or before that date or in respect of that period.
1.6 References in this Deed to any payment, dividend or distribution shall
include anything which is deemed to be a payment, dividend or distribution for
taxation purposes.
1.7 References in this Deed to any payment, dividend or distribution paid or
made on or before a particular date shall include:-
1.7.1 any payment, dividend or distribution which on or before that date
has fallen due to be made; and
1.7.2 any Event which has occurred on or before that date and is deemed to
be a payment, dividend or distribution.
1.8 In determining for the purposes of clause 2.8 whether a charge on or power
to sell, mortgage or charge any of the shares or assets of the Company exists
at any time the fact that any Taxation is not yet payable or may be paid by
instalments shall be disregarded and such Taxation shall be treated as becoming
due and a charge or power to sell, mortgage or charge as arising on the date of
the transfer of value or other date or event on or in respect of which it
becomes payable or arises and the provisions of Section 213 of the Inheritance
Tax Act 1984 shall not apply thereto.
1.9 References in this Deed to something being deemed or treated "for taxation
purposes" in a certain way shall mean that for the purposes of any applicable
legislation or decided case law relating to or having reference to taxation
and, in each case, subject to clause 1.12, effective at Completion, such things
are deemed or treated in the way described.
1.10 References in this Deed to clauses and the Schedule are (unless otherwise
stated) to clauses and the Schedule of this Deed. Headings are for convenience
only and shall not affect the construction or interpretation of this Deed.
1.11 In construing this Deed general words introduced by the word "other" shall
not be given a restrictive meaning by reason of the fact that they are preceded
by words indicating a particular class of acts, matters or things and general
words and defined terms shall not be given a restrictive meaning by reason of
the fact that they are followed by particular examples intended to be embraced
by the general words.
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1.12 References in this Deed to any statute or statutory provision shall be
construed first as a reference to such statute or statutory provision as in
force at the date of this Deed and as respectively re-enacted or consolidated
and second as a reference to any statute or statutory provision of which such
statute or statutory provision is a re-enactment or consolidation.
1.13 References in this Deed to a "person" shall include references to any
persons, unincorporated association, body of persons, partnership, trust or
company.
1.14 Where used in this Deed the terms "Business Day", "Completion",
"Completion Accounts" and "Completion Date" shall have the meanings attributed
to them in the Agreement.
2. COVENANTS
2.1 Subject to the exclusions and limitations in clause 3 the Covenantor hereby
covenants to pay to the Purchaser the amount of any Liability to Taxation
suffered by the Company resulting from or in respect of:-
2.1.1 any Event occurring or deemed, for taxation purposes, to have
occurred on or before Completion; or
2.1.2 any Profits earned, accrued or received in respect of any period
ending on or before Completion.
2.2 Without prejudice to the generality of clause 2.1 and subject to the
exclusions and limitations in clause 3 the Covenantor covenants to pay to the
Purchaser the amount of any liability of the Company to repay in whole or in
part any payment for group relief or payment for the surrender of surplus
advance corporation tax or payment for a transferred tax refund received
pursuant to any agreement or arrangement entered into on or before Completion.
2.3 Without prejudice to the generality of clause 2.1 and subject to the
exclusions and limitations in clause 3 the Covenantor covenants to pay to the
Purchaser the amount of any Liability to Taxation suffered by the Company for
value added tax incurred in relation to supplies made prior to Completion
(including, without limitation, as a result of the Company being the
representative member of or treated as a member of the same group as another
body corporate for the purposes of Section 43 of the Value Added Tax Act 1994).
2.4 Without prejudice to the generality of clause 2.1 and subject to the
exclusions and limitations in clause 3 the Covenantor covenants to pay to the
Purchaser the amount of any Liability to Taxation suffered by the Company
resulting from or in respect of any of the following occurring or being deemed
to occur at any time after Completion:-
2.4.1 the disposal by any Vendor Company of any asset or of any interest in
or right over any asset; or
2.4.2 the making by any Vendor Company of any such payment or deemed
payment as constitutes a chargeable payment for the purposes of Section 214
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ICTA 1988; or
2.4.3 any Vendor Company ceasing to be resident in the United Kingdom for
taxation purposes;
and, for the purposes of this clause 2.4, the term "Vendor Company" shall mean
the Covenantor and any company that may be treated for taxation purposes as
being, or as having at any time been, either a member of the same group of
companies as the Covenantor or otherwise associated with the Covenantor other
than the Company.
2.5 Without prejudice to the generality of clause 2.1 and subject to the
exclusions and limitations in clause 3 the Covenantor covenants to pay to the
Purchaser the amount of any penalties, charges, surcharges, fines or interest
of the Company relating to Taxation which arise in consequence of or by
reference to any Event occurring or Profits earned, accrued or received on or
before Completion.
2.6 Without prejudice to the generality of clause 2.1 and subject to the
exclusions and limitations in clause 3 the Covenantor covenants to pay to the
Purchaser the amount of all costs and expenses reasonably incurred or payable
by the Purchaser or the Company in connection with any Tax Assessment or any
matter for which a claim may be made by the Purchaser which is a successful
claim.
2.7 Without prejudice to the generality of clause 2.1 and subject to the
exclusions and limitations in clause 3 the Covenantor covenants to pay to the
Purchaser the amount of any Liability to Taxation suffered by the Purchaser or
the Company as a result of any inheritance tax which:-
2.7.1 is at Completion a charge on any of the shares or assets of the
Company or gives rise to a power to sell, mortgage or charge any of the
shares or assets of the Company; or
2.7.2 after Completion becomes a charge on or gives rise to a power to
sell, mortgage or charge any of the shares or assets of the Company being a
liability in respect of additional inheritance tax payable on the death of
any person within seven years after a transfer of value if a charge on or
power to sell, mortgage or charge any such shares or assets existed at
Completion or would, if the death had occurred immediately before
Completion and the inheritance tax payable as a result of such death had
not been paid, have existed at Completion; or
2.7.3 arises as a result of a transfer of value occurring on or before
Completion (whether or not in conjunction with the death of any person
whenever occurring) which increased or decreased the value of the estate of
the Company.
2.8 Without prejudice to the generality of clause 2.1 the Covenantor covenants
to pay to the Purchaser the amount of any Liability to Taxation suffered by the
Purchaser or the Company resulting from or in respect of the dividend of
(pound)400,000 paid on 25 March 1997 and clause 3 (Exclusions and Limitations)
shall not apply to the covenant contained in this clause 2.8.
2.9 Any payment made by the Covenantor to the Purchaser under this Deed shall
(so far
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as possible) be paid as a reduction in the consideration payable by the
Purchaser to the Covenantor under the Agreement for the shares.
3. EXCLUSIONS AND LIMITATIONS
3.1 The covenants in clause 2 shall not apply to any liability under that
clause to the extent that:-
3.1.1 provision or reserve specifically in respect of that liability was
made in the Completion Accounts; or
3.1.2 the amount of that liability arises or is increased as a result only
of any change in the law (including a change in the rates of Taxation) or a
change in the published practice of any Taxation Authority occurring after
Completion with retrospective effect; or
3.1.3 an amount in respect of that liability has been recovered pursuant to
the warranties and obligations contained in the Agreement or has already
been recovered under this Deed; or
3.1.4 it is incurred or increased as a result of any voluntary act or
deliberate omission carried out after Completion by the Purchaser or the
Company outside the ordinary course of business which voluntary act or
deliberate omission could reasonably have been avoided and which the
relevant person carrying out the act ought reasonably to have been aware
would give rise to a Liability to Taxation; or
3.1.5 it is in respect of interest, fines, penalties, surcharges and
charges incidental or relating to the imposing of Taxation which arise
solely due to the default or delay of the Purchaser in making payment to a
Taxation Authority after payment has been received from the Covenantor
under this Deed; or
3.1.6 it would not have arisen but for a change in the nature or conduct of
the trade of the Company after Completion; or
3.1.7 it arises as a result of a change after Completion in any accounting
policy, or tax reporting practice or the length of any accounting period of
the Company; or
3.1.8 it would not have arisen or would have been reduced or eliminated but
for the failure or omission on the part of the Company or the Purchaser
after Completion to make any valid claim, election, surrender or disclaimer
or to give any valid notice the making or giving of which was taken into
account in computing the provision for Taxation in the Completion Accounts;
or
3.1.9 it would not have arisen or would have been reduced or eliminated but
for the making or giving of any claim, election, surrender, or disclaimer
made or the giving of any notice after Completion on the part of the
Company or the Purchaser the making or giving of which was not taken into
account in computing the provision for Taxation in the Completion Accounts.
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3.2 Notwithstanding anything in this Deed to the contrary:-
3.2.1 the Covenantor shall not be liable for any claim or claims under this
Deed unless written particulars thereof giving reasonable details of the
specific matters in respect of which any such claim is made shall have been
given to the Covenantor on or before the date which is three calendar
months after the accounting period of the Company to end six years after
the Completion Date and in each such case unless legal proceedings are
commenced and served upon the Covenantor within six months after notice of
such claim is given to the Covenantor;
3.2.2 the Covenantor shall not be liable in respect of any claim pursuant
to the terms of this Deed or for breach of the Warranties as defined in the
Agreement unless the aggregate amount of the claim together with all other
claims exceeds (pound)20,000 but once such aggregate amount has been
exceeded the Covenantor shall be liable for the whole of such aggregate
amount and not just the excess;
3.2.3 the aggregate liability of the Covenantor for claims pursuant to the
terms of this Deed and for breach of the Warranties (as defined in the
Agreement) shall not exceed (pound)2,994,535.
4. WITHHOLDINGS AND DEDUCTIONS
4.1 All sums other than interest payable by the Covenantor to the Purchaser
under this Deed shall be paid free and clear of all deductions or withholdings
whatsoever save only as may be required by law. If any such deductions or
withholdings are required by law the Covenantor shall be obliged to pay such
sum as will, after such deduction or withholding has been made, leave the
amount the Purchaser would have been entitled to receive in the absence of any
such requirement to make a deduction or withholding.
4.2 In the event that any sum, other than interest, paid to the Purchaser as a
result of the obligations contained in this Deed or in the Agreement will be
subject to Taxation the Covenantor shall be obliged to pay such sum as will,
after payment of the Taxation so charged, leave a sum equal to the amount that
would otherwise be payable under any such obligation.
5. PAYMENTS RECEIVED BY THE PURCHASER OR THE COMPANY
5.1 If any payment is made by the Covenantor in full discharge of a liability
which has arisen under this Deed in respect of a Liability to Taxation then:-
5.1.1 if the Purchaser or the Company, as the case may be, subsequently
receives from any person (including any Taxation Authority) other than the
Purchaser, the Company or any person connected with any of them for
taxation purposes a payment or credit in respect of the Taxation in
question the payment or credit shall be dealt with in accordance with
clause 5.2; or
5.1.2 if the Purchaser or the Company is entitled to a payment or credit in
respect of the Taxation in question from any person (including any Taxation
Authority) other than the Purchaser, the Company or any person connected
with any of them for taxation purposes or at some subsequent date becomes
entitled to such payment or credit then the Purchaser shall promptly notify
the Covenantor of the entitlement and shall if so required by the
Covenantor and at the Covenantor's sole
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expense take, or procure the Company shall take, all appropriate steps to
enforce that entitlement (keeping the Covenantor fully informed of the
progress of any action taken) and any payment or credit received shall be
dealt with in accordance with clause 5.2.
5.2 Where it is provided under clause 5.1 that a payment or credit is to be
dealt with in accordance with this clause:-
5.2.1 in the case of a payment, the Purchaser shall, within five Business
Days of receipt, pay to the Covenantor the amount of the payment received;
5.2.2 in the case of a credit, the Purchaser shall, within five Business
Days of the date on which Taxation would otherwise have been payable had
such credit not been available, pay to the Covenantor an amount equal to
the amount of such Taxation;
subject to a maximum of the payment referred to in clause 5.1 made by the
Covenantor under this Deed. To the extent there is an excess following
repayment the excess will be set against (and so reduce or eliminate) any
liability of the Covenantor under this Deed then outstanding or which arises
after such determination, in the latter case as and when such liability arises.
6. CONDUCT OF CLAIMS
6.1 If after the Purchaser or the Company becomes aware of a Tax Assessment
relevant for the purposes of this Deed, the Purchaser shall as soon as is
reasonable and in the event of a Tax Assessment or demand which is subject to a
time limitation, within 10 Business Days of receipt give written notice of the
Tax Assessment to the Covenantor but so that the giving of such notice shall
not be a condition precedent to the liability of the Covenantor. If the
Covenantor shall indemnify the Company to the Purchaser's reasonable
satisfaction against all losses, costs, damages and expenses (including,
without limitation, interest on overdue Taxation) which may be incurred, the
Purchaser shall or shall procure that the Company shall take such action and
give such information and assistance in connection with the affairs of the
Company as the Covenantor may reasonably, by written notice to the Purchaser,
request to resist, appeal or compromise the Tax Assessment.
6.2 The Purchaser shall not be obliged to procure that the Company appeals
against any Tax Assessment if, having given the Covenantor written notice of
the receipt of that Tax Assessment in accordance with clause 6.1, it has not
within ten Business Days of the giving of such notice received instructions in
writing from the Covenantor, in accordance with clause 6.1, to make that
appeal.
6.3 The Covenantor shall not be entitled to request the Purchaser takes or
procures the taking of any action under this clause if in respect of any Tax
Assessment notified under clause 6.1 either it is alleged by the Taxation
Authority in question that either the Covenantor or the Company, whilst it was
under the control of the Covenantor, has committed acts or omissions which may
constitute fraud or misfeasance or it is alleged by the Taxation Authority in
question that the Covenantor, or the Company whilst it was under the control of
the Covenantor, has committed acts or omissions which may constitute
negligence.
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6.4 For the avoidance of doubt, the actions which the Covenantor may reasonably
request under clause 6.1 shall include the Company applying to postpone (so far
as legally possible) the payment of any Taxation but the Covenantor shall not
be entitled under clause 6.1 to request that it be allowed to take on or take
over the conduct of all or any proceedings arising in connection with the Tax
Assessment in question. The Purchaser shall and shall procure that the Company
shall provide the Covenantor with drafts and copies of all correspondence
entered into or to be entered into and notes of any conversations or meetings
with any Taxation Authority to the extent that such correspondence or notes
relate to the Tax Assessment in question and shall not submit any material
correspondence without the prior written consent of the Covenantor, such
consent not be unreasonably withheld. The Covenantor shall keep all such
information confidential. The Purchaser shall not settle or compromise any
claim without the prior written consent of the Covenantor, such consent not to
be unreasonably withheld.
6.5 The Company or the Purchaser (as the case may be) shall be at liberty
without reference to the Covenantor to admit, compromise or otherwise deal with
any Tax Assessment after whichever is the earliest of:-
6.5.1 the service of a notice in writing on the Company or the Purchaser by
the Covenantor to the effect that it considers the Tax Assessment should no
longer be resisted;
6.5.2 the expiry of a period of fifteen Business Days following the service
of a notice by the Purchaser on the Covenantor requiring the Covenantor to
clarify or explain the terms of any request made under clause 6.1 if no
satisfactory written clarification or explanation reasonably acceptable to
the Purchaser is received by the Purchaser within that period; and
6.5.3 if appropriate, the expiration of any period prescribed by applicable
legislation for the making of an appeal against either the Tax Assessment
in question or the decision of any court or tribunal in respect of any such
Tax Assessment, as the case may be.
6.6 Notwithstanding anything to the contrary in clause 6, the Purchaser shall
not be obliged to take or procure that the Company takes any action, the effect
of which is, or is reasonably likely, to increase the amount of Taxation
payable by the Company or the Purchaser in respect of accounting periods ending
after Completion beyond what that liability would have been but for the taking
of that action, and shall not be obliged to take or procure that the Company
takes any action the effect of which is likely to materially prejudice the
ability of the Company to order its affairs in such a way as to minimise its
liability to make any payment of or relating to Taxation in respect of any such
later accounting periods.
7. AMOUNT OF A LIABILITY TO TAXATION
The amount of a Liability to Taxation in respect of which the Covenantor
becomes liable to pay an amount to the Purchaser under clause 2 shall be as
follows:-
7.1 in the case of an A Liability the amount of such payment;
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7.2 in the case of a B Liability the amount of Taxation saved as a consequence
of the application of the Relief;
7.3 in the case of a C Liability the amount of the repayment which would
otherwise have been obtained or the amount by which such repayment is reduced,
as the case may be;
7.4 in the case of a D Liability the amount of Taxation which would have been
saved had such Relief been available on the assumption that the Company's
Profits or Taxation are such that the Relief could have been fully utilised in
computing such Profits or Taxation at the date of the loss or application or
the Relief.
8. DUE DATE FOR PAYMENT
8.1 Where a Liability to Taxation to which this Deed applies involves a
liability of the Purchaser or the Company to make a payment or increased
payment of Taxation (including, without limitation, any case where a payment
under this Deed itself results in further Taxation becoming due), the
Covenantor shall pay to the Purchaser the amount claimed on or before the date
which is the later of the date five Business Days after demand is made by the
Purchaser and the fifth Business Day prior to the date on which the Taxation in
question is payable to the Taxation Authority.
8.2 Where a Liability to Taxation to which this Deed applies involves a B
Liability or a set off of a right to repayment of a C Liability or the
application of any Relief under a D Liability, the Covenantor shall pay to the
Purchaser the amount claimed on or before the date which is the later of the
date falling five Business Days after demand is made by the Purchaser and the
fifth Business Day before the last date upon which a payment of Taxation, which
has been reduced or eliminated by the use of the Relief or right to repayment
of Taxation is or would have been required to be made to the relevant Taxation
Authority;
8.3 Where a Liability to Taxation to which this Deed applies involves the loss
of a right to repayment as a C Liability or the loss of a Relief as a D
Liability, the Covenantor shall pay to the Purchaser the amount claimed on or
before the date which is the later of the date, five Business Days after demand
is made by the Purchaser and:-
8.3.1 if the Relief lost was a Relief other than a right to repayment of
Taxation, the date falling five Business Days before the last date upon
which the Taxation which would have been saved but for the loss of the
Relief is required to be paid to the relevant Taxation Authority; or
8.3.2 if the Relief lost was a right to the repayment of Taxation, the date
upon which the repayment was due from the relevant Taxation Authority;
8.4 In any other case involving a liability under this Deed, the due date for
the making of a payment by the Covenantor will be five Business Days after
demand is made by the Purchaser.
8.5 Any sums not paid by the Covenantor on the date specified in clauses 8.1,
8.2, 8.3 or 8.4 for payment of the same shall bear interest (which shall accrue
from day to day after as well as before any judgment for the same) from the due
date for payment at the
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rate per annum of the base rate of Bank of Scotland applicable from time to
time (or in the absence of such rate at such similar rate as the Purchaser
shall select) plus 3 per cent. to and including the day of actual payment of
such sums, such interest to accrue and be payable from day to day. Such
interest shall be paid on the demand of the Purchaser.
9. OVER-PROVISIONS
9.1 If the Company's auditors determine that any provision in the Completion
Accounts for any Liability to Taxation or liability to make a payment in
respect of Taxation has proved to be an over provision, the Purchaser will
(except where such provision has proved to be an over provision as a result of
any Event occurring after Completion) as soon as reasonably practicable
thereafter, pay to the Covenantor the lesser of:-
9.1.1 the amount over-provided (as determined by the auditors of the
Company); and
9.1.2 the aggregate amount (if any) paid by the Covenantor under this Deed
prior to the determination of the over-provision, less any amount thereof
previously repaid to the Covenantor under any provision of this Deed.
9.2 If upon determination of an over-provision by the auditors of the Company
pursuant to clause 9.1 the amount mentioned in paragraph 9.1.1 exceeds the
amount mentioned in paragraph 9.1.2, the excess will be set against (and so
will reduce or eliminate) any liability of the Covenantor under this Deed then
outstanding or which arises after such determination, in the latter case as and
when such liability arises.
9.3 In determining under clause 9.1 whether any provision in the Completion
Accounts has proved to be an over-provision, the auditors of the Company will
act as experts and not as arbitrators and (in the absence of manifest error)
their determination will be conclusive and binding on the parties.
10. MITIGATION
10.1 Prior to making any claim under this Deed the Purchaser shall:-
10.1.1 procure that the Company uses such Reliefs (other than those Reliefs
contained in the definition of "Liability to Taxation") available to it
(including by way of surrender from one Company to another);
10.1.2 make all elections (save in respect of matters after the date of
this Deed), to reduce or eliminate the Covenantors liability under this
Deed; or
10.1.3 deliver to the Covenantor a certificate from the auditors of the
Company confirming that all such Reliefs have been so used and elections
made.
10.2 The Covenantor may, by notice in writing to the Purchaser, elect to
mitigate or eliminate any liability under this Deed by surrendering or
procuring the surrender to the Company of Group Relief (as defined in section
402 ICTA 1988) or advance corporation tax to the extent permitted by law but
without any payment being made by the Purchaser or the Company in consideration
of the surrender and the Covenantor shall be absolved
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from a liability under this Deed to the extent of the amount of Taxation
relieved by any such surrender. The Purchaser shall procure that the Company
takes all such steps as the Covenantor may reasonably require to permit and
effect such surrender and claim of such Relief.
11. PURCHASERS COVENANTS
11.1 The Purchaser hereby covenants with the Covenantor to pay to the
Covenantor, so far as possible by way of adjustment to the consideration
payable by the Purchaser to the Covenantor under the Agreement, an amount
equivalent to any Taxation for which the Covenantor or any other person falling
within section 767A(2) of ICTA 1988 becomes liable by virtue of the operation
of section 767A and 767B of ICTA 1988 in circumstances where the taxpayer
company (as referred to in section 767A(1)) is the Company. The covenant
contained in this clause 11.1 shall:
11.1.1 extend to any costs incurred by the Covenantor or such other person
in connection with such Taxation or a claim under clause 11.1;
11.1.2 not apply to Taxation to the extent that the Purchaser could claim
payment in respect of it under clause 2 save to the extent that payment has
already been made under this Deed in respect of that liability; and
11.1.3 not apply to Taxation which has been recovered under section 867B(2)
of ICTA 1988 (and the Covenantor shall procure that no such recovery is
sought to the extent that payment is made hereunder).
Clauses 6 and 8 (Conduct of claims and Due Date for payment) shall apply to the
covenant contained in Clause 11.1 as they apply to the covenants contained in
clause 2, replacing reference to the Covenantor by the Purchaser (and vice
versa) and making any other necessary modifications.
11.2 The Purchaser undertakes that it will procure that the Company will not do
anything which may prejudice any surrenders of group relief made by the Company
before Completion in respect of any accounting period ended on or before
Completion, and that it will procure that the Company will render all
reasonable assistance to the Covenantor to enable effect to be given to the
surrenders. In particular, the Purchaser undertakes that it will not take
action after Completion to disclaim any allowances claimed by or made to the
Company prior to Completion or require that the amount thereof be reduced if
the result of such action would be to prejudice the said group relief
surrenders, and agrees to pay to the Covenantor an amount equal to any loss or
liability accordingly. For the avoidance of doubt, such indemnity will (without
prejudice to its generality) extend to any reduction in utilisable tax losses
or other reliefs.
11.3.1 The Purchaser hereby covenants with the Covenantor to pay to the
Covenantor and each company in the Covenantor's group any value added tax
recoverable from the Vendor or any other member of the Covenantor's group
pursuant to section 43 Value Added Tax Act 1994 attributable to imports or
supplies actually made by the Company (whether or not such imports or supplies
are treated as made by the Covenantor or any member of the Covenantor's group
under that section);
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11.3.2 the Purchaser shall procure that the Company provides the Covenantor or
Thomas Cook & Son Insurance Brokers Ltd ("the Group Member") with such
documents, information and assistance as they may reasonably require to enable
them to comply with their obligations in relation to VAT, in particular (but
without limitation) the making of returns and accounting to for tax;
11.3.3 the Purchaser shall pay or shall procure that the Company pays to the
Covenantor or the Group Member an amount equal to any VAT which the Company is
entitled to recover by way of repayment from H M Customs & Excise as a result
of any supplies of goods or services actually made to the Group Member (but
treated as made to the Company under section 43(1) Value Added Tax Act 1994) in
the prescribed accounting period current at Completion;
11.3.4 the Purchaser shall pay or shall procure that the Company pays to the
Covenantor any amount which it is required to pay pursuant to clause 11.3.1 of
this deed on or before the date which is five Business Days before the date on
which the Group Member is required to account for the VAT referred to therein;
11.3.5 the Purchaser shall pay or shall procure that the Company pays any
amount which it is required to pay pursuant to clause 11.3.3 five Business Days
after the date on which the Company is entitled to receive the repayment
referred to therein.
12. GENERAL
12.1 Any remedy or right conferred by this Deed on the Purchaser for the breach
of this Deed shall be in addition to and without prejudice to any other right
or remedy available to it.
12.2 No failure or delay by the Purchaser or time or indulgence given by it in
or before exercising any remedy or right under or in relation to this Deed
shall operate as a waiver of the same nor shall any single or partial exercise
of any remedy or right preclude any further exercise of the same or the
exercise of any other remedy or right.
12.3 No waiver by any party of any requirement of this Deed or of any remedy or
right under this Deed shall have effect unless given by notice in writing
signed by such party. No waiver of any particular breach of the provisions of
this Deed shall operate as a waiver of any repetition of such breach.
12.4 Any release, waiver or compromise or any other arrangement which the
Purchaser gives or enters into with any party to this Deed in connection with
this Deed shall not affect any right or remedy of the Purchaser as regards any
other party's liabilities under or in relation to this Deed and such other
party shall continue to be bound by this Deed as if it had been the sole
contracting party.
12.5 Time shall be of the essence of this Deed both as regards the dates and
periods specifically mentioned and as to any dates and periods which may by
agreement in writing between the parties be substituted for any of them.
12.6 This Deed may be executed in two or more counterparts and execution by
each of the parties of any one of such counterparts will constitute due
execution of this Deed.
<PAGE>
- 14 -
12.7 The Covenantor shall and shall procure that any third party shall, do,
execute and perform all such further deeds, documents, assurances, acts and
things as may be necessary to give effect to this Deed.
13. NOTICES
13.1 Any notice to be given under this Deed shall be given in writing and
signed by or on behalf of the party giving it and any notice given by the
Covenantor shall be irrevocable without the written consent of the Purchaser.
Any notice required to be given by the Covenantor shall be valid only if it is
signed by the Covenantor or by its duly authorised agent and evidence of whose
authority has been delivered to the Purchaser. Except in the case of personal
service, any notice shall be sent or delivered to the party to be served at the
address set out in the Schedule and if a person or officer is named for the
purpose in the Schedule the notice shall be marked for his attention. Any
alteration in such details shall, to have effect, be notified to the other
parties in accordance with this clause.
13.2 Service of a notice must be effected by one of the following methods:-
13.2.1 personally on an individual or on a director or the secretary of any
party and shall be treated as served at the time of such service;
13.2.2 by prepaid first class post (or by airmail if from one country to
another) and shall be treated as served on the second (or if by airmail the
fourth) Business Day after the date of posting. In proving service it shall
be sufficient to prove that the envelope containing the notice was
correctly addressed, postage paid and posted; or
13.2.3 by delivery of the notice through the letterbox of the party to be
served and shall be treated as served on the first Business Day after the
date of such delivery.
13.3 The Covenantor irrevocably appoints Messrs. Eversheds of London Scottish
House, 24 Mount Street, Manchester M2 3DB as its agent for service of
proceedings in relation to any matter arising out of this Deed.
14. APPLICABLE LAW AND JURISDICTION
14.1 This Deed shall be governed by and construed in accordance with the laws
of England.
14.2 The parties irrevocably submit to the exclusive jurisdiction of the Courts
of England and Wales in respect of any claim, dispute or difference arising out
of or in connection with this Deed.
AS WITNESS this Deed has been executed as a deed by or on behalf of the parties
the day and year first before written.
<PAGE>
- 15 -
SCHEDULE
--------
PART I COVENANTOR
- -----------------
NAME REGISTERED OFFICE
- ---- -----------------
Bodycote International PLC 140 Kingsway
Manchester M19 1BB
PART II PURCHASER
- -----------------
NAME REGISTERED OFFICE
- ---- -----------------
Armor Holdings Limited 13386 International Parkway
Jacksonville
Florida 32218
SIGNED as a DEED
by BODYCOTE INTERNATIONAL
PLC acting by Director
and Director/Secretary
/s/
.......................................
Signature of Director
/s/
.......................................
Signature of Director/Secretary
<PAGE>
- 16 -
SIGNED as a DEED
by ARMOR HOLDINGS LIMITED
acting by Director
and Director/Secretary
/s/
.......................................
Signature of Director
/s/
.......................................
Signature of Director/Secretary
<PAGE>
DATED 16 APRIL 1997
---------------------------------------
(1) ARMOR HOLDINGS, INC
(2) ALASTAIR MORRISON and others
- and -
(3) ASHURST MORRIS CRISP
--------------------------------
ESCROW AGREEMENT
RELATING TO
SHARES OF COMMON STOCK
IN
ARMOR HOLDINGS, INC.
--------------------------------
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
Tel: 0171-638-1111
Fax: 0171-972-7990
CNA/CY469282
<PAGE>
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into as a DEED on 16 April 1997
BETWEEN:-
(1) ARMOR HOLDINGS, INC whose principal place of business is at 13386
International Parkway, Jacksonville, Florida 32218 USA ("AHI");
(2) THE SEVERAL PERSONS whose names and addresses are set out in the
Schedule hereto (the "Warrantors"); and
(3) ASHURST MORRIS CRISP of Broadwalk House, 5 Appold Street, London EC2A
2HA (the "Escrow Agent" which term shall include any successor escrow
agent appointed in accordance with clause 7.2 hereof).
WHEREAS:
The parties hereto are entering into this Escrow Agreement pursuant to clause
4 of the agreement dated 16 April 1997 (the "Purchase Agreement") made
between AHI, Armor Holdings Limited ("AHL"), the Institutional Vendors (as
defined therein), the Management Vendors (as defined therein) and Martin
Brayshaw.
IT IS HEREBY AGREED as follows:
1. APPOINTMENT OF ESCROW AGENT
The Escrow Agent is hereby appointed to act as escrow agent hereunder
and the Escrow Agent agrees to act as such, pursuant to the terms
hereinafter set forth.
2. ESCROW FUND
On the date hereof, each of the Warrantors shall deliver to the
Escrow Agent a stock certificate or certificates registered in the
name of the relevant Warrantor (save that the stock certificate
delivered by Martin Brayshaw shall be in the name of Alastair
Morrison) in respect of that number of shares of common stock of AHI,
$.01 par value per share ("Common Stock") as is set forth next to the
relevant Warrantor's name in the Schedule hereto (the "Escrow
Shares") and together with each such certificate shall further
deliver (or as soon as reasonably practicable and in any event within
14 days after such delivery shall deliver) a stock power duly
endorsed in blank (together the "Escrow Fund") and shall deliver to
AHI any power of attorney pursuant to which this Escrow Agreement and
the stock power is executed on behalf of the relevant Warrantor. The
Escrow Fund shall be held in escrow by the Escrow Agent, pending its
disposition as hereinafter provided.
3. DISPOSITION OF ESCROW FUND
3.1 The stock certificates delivered pursuant to clause 2 hereof
represent the Common Stock that shall be held in escrow in accordance
with the terms of this Escrow
<PAGE>
Agreement. Save as otherwise provided in clause 5 hereof, the Escrow
Agent shall hold the Escrow Fund until the earlier of:
(a) 16 April 1998; and
(b) the receipt by the Escrow Agent of notice in writing from AHI
that the audited accounts of AHI for the year ending 31
December 1997 have been issued (and AHI undertakes to the
Warrantors that it will deliver such notification to the
Escrow Agent forthwith upon the audited accounts of AHI for
the year ending 31 December 1997 being issued)
(the earlier of such dates being the "Expected Release Date")
PROVIDED THAT the Escrow Shares deposited by a Warrantor shall be
retained in escrow by the Escrow Agent beyond the Expected Release
Date if, prior to the Expected Release Date:
(c) the Escrow Agent has received notice in writing from AHI that
AHI has notified that Warrantor that AHI believes that it has
a Claim against that Warrantor, accompanied by a copy of its
notification to the Warrantor of that Claim pursuant to the
provisions of clause 6.6 of the Purchase Agreement; or
(d) the Escrow Agent has received notice in writing from the
Warrantor owning such Escrow Shares that such Warrantor
unconditionally consents to such retention.
3.2 In the event of AHI notifying the Escrow Agent as provided in clause
3.1(c) hereof or the Warrantor owning the relevant Escrow Shares
notifying the Escrow Agent as provided in clause 3.1(d) hereof, the
Escrow Agent shall hold the Escrow Fund until the receipt by the
Escrow Agent of notice in writing from AHI that:
(a) the relevant Warrantor has admitted liability in writing to
AHI in respect of the Claim; or
(b) AHI has obtained judgment of a court of competent
jurisdiction in respect of the Claim in favour of AHI and
that such judgment is not capable of appeal or the time for
any appeal in respect of that judgment has elapsed; or
(c) the relevant Warrantor has obtained judgment of a court of
competent jurisdiction in respect of the Claim in favour of
the relevant Warrantor and that such judgment is not capable
of appeal or the time for any appeal in respect of that
judgment has elapsed; or
(d) AHI has waived all rights which it has in respect of the
Claim or has otherwise agreed with the relevant Warrantor
that it will not proceed with the Claim
PROVIDED THAT in the event of AHI notifying the Escrow Agent as
provided in clause 3.1(c) hereof, the Escrow Agent shall hold the
Escrow Fund only until the expiry of 90 days from the date of the
notification unless prior to the expiry of such 90 days AHI further
notifies the Escrow Agent in writing that AHI has received a written
opinion from Queen's Counsel that AHI has a reasonable prospect of
success in respect of the relevant Claim. AHI undertakes to the
Warrantors that it will deliver
2
<PAGE>
to the Warrantors' Agent a copy of any such written opinion, as soon
as reasonably practicable following the receipt by AHI of the same.
3.3 AHI shall have the right, upon written notice to the Escrow Agent
given with any such notification as is referred to in clause 3.2(a)
or 3.2(b) hereof, to set-off and deduct from the Escrow Fund and to
cause the Escrow Agent to release from escrow and deliver to AHI or
its order the stock certificates representing that number of Escrow
Shares having a value equal to the amount of any liability owed by a
Warrantor to AHI as a result of the relevant Claim, as agreed by the
relevant Warrantor or determined by a court of competent
jurisdiction, up to the maximum number of Escrow Shares deposited by
that Warrantor pursuant to clause 2 hereof, together with the
relative stock power as delivered to the Escrow Agent as provided in
clause 2 hereof. Any notification from AHI to the Escrow Agent
pursuant to this clause 3.3 shall include the following information:
(a) the identity of the relevant Warrantor;
(b) the total number of Escrow Shares that the Escrow Agent is
thereby directed to release from the Escrow Fund, up to the
maximum number of Escrow Shares deposited by the relevant
Warrantor pursuant to clause 2 hereof;
(c) the party or parties to whom the Escrow Agent is thereby
directed to release the relevant Escrow Shares, together with
the relative stock power as delivered to the Escrow Agent as
provided in clause 2 hereof; and
(d) the date upon which the Escrow Agent is directed to release
such Escrow Shares and related documents.
3.4 For all purposes of this Escrow Agreement, the value of each share of
Common Stock to be released from escrow by the Escrow Agent shall be
$8.56875 (being the value attributed to the Common Stock for the
purposes of the calculation of the price payable by AHI pursuant to
the Purchase Agreement).
3.5 Any Escrow Shares released by the Escrow Agent pursuant to clause 3.3
hereof shall be treated as pro tanto discharging or reducing the
liability of the relevant Warrantor to make payment to AHI in respect
of the relevant Claim.
3.6 If prior to the Expected Release Date the Escrow Agent has not
received notice as referred to in clause 3.1(c) or clause 3.1(d)
hereof then as soon as reasonably practicable after the Expected
Release Date the Escrow Agent shall release from escrow and deliver
to the relevant Warrantor who delivered the same the stock
certificates representing the Escrow Shares deposited by that
Warrantor pursuant to clause 2 hereof, together with the relative
stock power as delivered to the Escrow Agent as provided in clause 2
hereof.
3.7 If prior to the Expected Release Date the Escrow Agent has received
notice as referred to in clause 3.1(c) hereof but prior to the expiry
of 90 days from the date of such notification the Escrow Agent has
not received notice as referred to in the proviso to clause 3.2
hereof then as soon as reasonably practicable after the expiry of
such 90 days the Escrow Agent shall release from escrow and deliver
to the relevant
3
<PAGE>
Warrantor who delivered the same the stock certificates representing
the Escrow Shares deposited by that Warrantor pursuant to clause 2
hereof, together with the relative stock power as delivered to the
Escrow Agent as provided in clause 2 hereof.
3.8 If prior to the Expected Release Date the Escrow Agent has received
notice as referred to in clause 3.1(c) hereof and prior to the expiry
of 90 days from the date of such notification the Escrow Agent has
also received notice as referred to in the proviso to clause 3.2
hereof then, provided that the Escrow Agent has also received notice
pursuant to clause 3.2(c) or 3.2(d) hereof, as soon as reasonably
practicable after the receipt of the notice pursuant to clause 3.2(c)
or 3.2(d) hereof the Escrow Agent shall release from escrow and
deliver to the relevant Warrantor who delivered the same the stock
certificates representing the Escrow Shares deposited by that
Warrantor pursuant to clause 2 hereof, together with the relative
stock power as delivered to the Escrow Agent as provided in clause 2
hereof.
3.9 If prior to the Expected Release Date the Escrow Agent has received
notice as referred to in clause 3.1(c) or 3.1(d) hereof and, in the
event of such notice being pursuant to clause 3.1(c) hereof, prior to
the expiry of 90 days from the date of such notification the Escrow
Agent has also received notice as referred to in the proviso to
clause 3.2 hereof then, if the Escrow Agent has also received notice
pursuant to clause 3.2(a) or 3.2(b) hereof, as soon as reasonably
practicable after the receipt of any notice pursuant to clause 3.3
hereof the Escrow Agent shall release from escrow and deliver to the
relevant Warrantor who delivered the same the stock certificates
representing the balance of Escrow Shares deposited by that Warrantor
pursuant to clause 2 hereof.
3.10 Until such time as an Escrow Share is released from the Escrow Fund
pursuant to clause 3.3 hereof, subject to any rights in favour of
third parties that may be granted by the Warrantors, the Warrantor
owning such Escrow Share shall be entitled to vote the same and to
receive dividends thereon, when, as and if declared by the Board of
Directors of AHI and to exercise all other rights and powers
available to him as the holder of the said share of Common Stock.
4. RIGHTS TO ESCROW FUND
The Escrow Fund shall be for the exclusive benefit of AHI and the
Warrantors and their respective successors and assigns, and no other
person or entity shall have any right, title or interest therein,
except as otherwise contemplated herein or by the Purchase Agreement.
For the avoidance of doubt, the Escrow Agent shall not be deemed to
be a trustee in respect thereof and shall have no obligations in
respect of the Escrow Fund or to AHI or the Warrantors save as
provided in this Escrow Agreement.
5. DISTRIBUTIONS FROM THE ESCROW FUND
5.1 The Escrow Agent shall continue to hold the Escrow Fund until
authorised under this Escrow Agreement to distribute the Escrow Fund,
or any specified portion thereof, as follows:
4
<PAGE>
(a) pursuant to clause 3 hereof;
(b) as provided in clause 6 hereof;
(c) as provided in clause 7(b) hereof; or
(d) as directed by an order, decree or judgment of a court of
competent jurisdiction.
5.2 It is agreed that the Escrow Agent may disburse any portion of the
Escrow Fund without any instructions if such distribution is pursuant
to clause 5.1(b), 5.1(c) or 5.1(d) hereof.
6. TERMINATION OF ESCROW
This Escrow Agreement may be terminated at any time by and upon the
receipt by the Escrow Agent of 10 days' prior written notice of
termination executed by AHI and all the Warrantors, directing the
distribution of all property then held by the Escrow Agent under and
pursuant to this Escrow Agreement.
7. THE ESCROW AGENT
7.1 Obligations
This Escrow Agreement sets forth all of the duties of the Escrow
Agent, which are administrative in nature, with respect to any and
all matters pertinent hereto. Except as otherwise expressly provided
herein, the Escrow Agent shall not be subject to nor be bound by the
provisions of any other agreement. The Escrow Agent may consult with
counsel and take such professional or legal advice (including the
advice of a partner of Ashurst Morris Crisp) as it shall consider fit
with respect to any issue in connection with the performance of its
duties hereunder and all acts taken or omitted in reliance upon such
advice shall be conclusively deemed to have been made in good faith.
7.2 Resignation and Removal
The Escrow Agent may resign from its duties hereunder at any time by
giving at least 45 days' prior written notice of such resignation to
AHI and the Warrantors and specifying a date upon which such
resignation shall take effect. Notwithstanding the foregoing,
however, the Escrow Agent shall, in the alternative, have the right,
at any time, following 10 days written notice to the other parties
hereto, to resign as Escrow Agent and deposit the Escrow Fund with a
court of competent jurisdiction and the Escrow Agent shall thereupon
have no further obligation with respect thereto. Upon receipt of such
notice, a successor escrow agent shall be appointed by AHI and the
Warrantors, such successor escrow agent to become the Escrow Agent
hereunder on the resignation date specified in such notice. AHI and
the Warrantors, acting jointly, may at any time remove the Escrow
Agent and substitute a new escrow agent by giving 10 days' prior
written notice hereof to the Escrow Agent then acting and paying all
fees and expenses of such Escrow Agent through the date of
termination.
5
<PAGE>
7.3 Indemnification
(a) AHI and the Warrantors jointly and severally undertake to
hold the Escrow Agent harmless from and against and indemnify
the Escrow Agent for any loss, liability, expense (including
its reasonable fees and expenses), claim or demand arising
out of or in connection with its acting as Escrow Agent under
this Escrow Agreement, except for any of the foregoing
arising out of the gross negligence or fraud of the Escrow
Agent.
(b) Neither the Escrow Agent nor its partners, employees or
agents shall be liable for any loss or damage occurring as a
result of any act or omission made by it in good faith or by
reason of any other matter or thing (save arising out of the
gross negligence or fraud of the Escrow Agent).
(c) The foregoing indemnities in this clause 7.3 shall survive
the resignation or substitution of the Escrow Agent and the
termination of this Escrow Agreement.
7.4 Expenses of the Escrow Agent
AHI shall bear the cost of all reasonable expenses incurred by the
Escrow Agent in the performance of services pursuant to this Escrow
Agreement including, but not limited to, reasonable legal fees
(including any fees incurred in defending any action brought by any
person against the Escrow Agent in connection with or arising out of
its holding or dealing with the Escrow Fund), and AHI agrees to
reimburse promptly the Escrow Agent upon receipt of a written request
for reimbursement and the presentation of proper vouchers or receipts
therefor.
7.5 Right to rely on notices
The Escrow Agent is authorised and directed to assume without enquiry
that any letter, notice or other document purporting to be given to
it by AHI or any of the Warrantors (or the Warrantors' Agent) whether
holographically signed or copied has been duly and validly given and
has been signed by a person authorised to do so. The Escrow Agent
shall not be liable for acting on any statement, notification,
instruction, direction, advice or opinion sent by or contained in a
letter, notice or other document notwithstanding that the same may
contain some error or may not be authentic. Any such reliance or
action aforesaid will in no circumstances amount to negligence for
the purpose of any provision of this Escrow Agreement or otherwise.
7.6 Withholdings
Notwithstanding any other provision of this Escrow Agreement, the
Escrow Agent make or authorise the making of any deduction or other
withholding required by law from the Escrow Fund or from any release
from the Escrow Fund and (if required) the payment of the same to the
relevant authority.
6
<PAGE>
8. DISPUTES
If any dispute should arise with respect to the release and/or
ownership or right of possession of the Escrow Fund, the Escrow Agent
is authorised and directed to retain in its possession, without
liability to anyone, all of any portion of the Escrow Fund until such
dispute shall have been settled either by agreement of the parties
concerned or by an order, decree or judgment of a court of competent
jurisdiction, but the Escrow Agent shall be under no duty whatsoever
to institute or defend any such proceedings.
9. COSTS
AHI and the Warrantors shall each bear all of their own fees and
expenses incurred by them in resolving any dispute arising under this
Escrow Agreement. Any costs incurred by the Escrow Agent in
connection with any dispute arising under this Escrow Agreement shall
be reimbursed to the Escrow Agent pursuant to the provisions of
clause 7.4 hereof.
10. CONFLICT OF INTEREST
AHI and each of the Warrantors hereby acknowledge that the Escrow
Agent is merely serving as a depository hereunder and that the Escrow
Agent has served as solicitors for AHI and AHL with respect to the
transactions contemplated by the Purchase Agreement. The Warrantors
agree that the Escrow Agent shall be entitled to serve as solicitors
and to represent AHI and AHL in any dispute between the parties
hereto, whether arising out of this Escrow Agreement, the Purchase
Agreement or otherwise and no claim of conflict of interest or
privilege shall be asserted against the Escrow Agent in any such
matter as a result of Escrow Agent's service as Escrow Agent
hereunder.
11. NOTICES
All notices or other communications which are required or permitted
to be given hereunder shall be in writing and shall personally be
delivered, sent by certified or registered mail, return receipt
requested, or sent by a reputable overnight courier to the parties
hereto at the addresses first above written or to such other
addresses as the party to whom notice is to be given may have
furnished to the other parties in writing. Any such communication
shall be deemed to have been given when (i) delivered, if personally
delivered, (ii) on the tenth business day after mailing, if sent by
mail, and (iii) on the second business day after dispatch, if sent by
overnight courier.
12. APPOINTMENT OF WARRANTORS' AGENT
By his execution of this Escrow Agreement, each Warrantor hereby
names, constitutes and appoints Alastair Morrison as its agent and
attorney, with full power of substitution and delegation, to act on
behalf of the Warrantors (the "Warrantors' Agent"). For purposes of
this Escrow Agreement, any required action or decision of the
Warrantors as a group shall be made on their behalf by the
Warrantors' Agent. For all purposes under this Escrow Agreement
notice to the Warrantors' Agent shall be deemed to be notice to each
of the Warrantors. If at any time the person named
7
<PAGE>
herein as Warrantors' Agent is unable or fails to act as the
Warrantors' Agent, a successor shall be designated by the vote of the
Warrantors who own a majority of the Escrow Shares (the "Required
Warrantors"). Upon notice to the other parties hereto, the
Warrantors' Agent may be removed or discharged at any time by the
Required Warrantors, and a new Warrantors' Agent appointed by the
Required Warrantors.
13. COUNTERPARTS
This Escrow Agreement may be executed in any number of counterparts,
and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but
one agreement.
14. GOVERNING LAW AND SUBMISSION TO JURISDICTION
14.1 This Escrow Agreement shall be governed by and construed in
accordance with English law.
14.2 The parties agree, for the benefit of the Escrow Agent, to submit to
the exclusive jurisdiction of the English courts in London. The
parties hereto irrevocably waive, to the fullest extent permitted by
law, any objection which they may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating
to this Escrow Agreement, or any judgment entered by any court in
respect hereof brought in London, England and further irrevocably
waive any claim that any suit, action or proceeding brought in
London, England has been brought in an inconvenient forum.
14.3 Each of the Warrantors agrees that service of any writ, notice or
other document for the purpose of any proceedings in such court shall
be duly served upon him if delivered or sent by registered post to
Clyde & Co. of 51 Eastcheap, London, EC3M 1JP (marked for the
attention of Jon Rayman, reference "Project Cabernet").
15. BENEFIT OF ESCROW AGREEMENT
All the terms and provisions of this Escrow Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; and nothing in this Escrow
Agreement, express or implied, is intended to confer on any person,
corporation, group or other entity, other than the parties hereto or
their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Escrow
Agreement. Anything contained herein to the contrary notwithstanding
this Escrow Agreement shall not be assignable by any party hereto
without the consent of the other parties hereto.
16. MODIFICATION
This Escrow Agreement shall not be altered or otherwise amended,
except pursuant to an instrument in writing signed by each of the
parties hereto.
17. DESCRIPTIVE HEADINGS
8
<PAGE>
The description headings in this Escrow Agreement are for convenience
only and shall not control or affect the meaning or constructing of
any provision of this Escrow Agreement.
18. TRANSFER
Each of the Warrantors shall not sell, assign, transfer, exchange or
otherwise dispose of, or grant any option or warranty with respect
to, all or any part of their respective portion of the Escrow Fund,
nor shall they create, incur or permit to exist any pledge, lien,
mortgage, hypothecation, security interest, charge or other
encumbrance with respect to all or part of their respective portion
of the Escrow Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
executed as a Deed and delivered on the date first above written.
9
<PAGE>
SCHEDULE
THE WARRANTORS
==============================================================================
NAME ADDRESS SHARES OF COMMON
STOCK PLACED IN ESCROW
- ------------------------------------------------------------------------------
Alastair Morrison Flat 6, 21 Embankment
Gardens, London SW3
4LW
- ------------------------------------------------------------------------------
Richard Bethell 60 Bromfelde Road,
London SW4 6PR
- ------------------------------------------------------------------------------
Martin Brayshaw Redhalll, 87 Main Street,
Lyddington, Nr
Uppingham, Rutland LE15
9LS
- ------------------------------------------------------------------------------
Alan Golacinski 5116 Woodmire Lane,
Alexandria, Virginia
22311, USA
- ------------------------------------------------------------------------------
William Daniell Carrera 108A No.3-21,
Bogota, Colombia
- ------------------------------------------------------------------------------
Mikhail Golovatov 22-39 Bolshaya Nikitshaya
Street, Moscow 103009,
Russia
- ------------------------------------------------------------------------------
Noel Philp 75 Clabon Mews, London
SW1X 0EQ
- ------------------------------------------------------------------------------
David Abbot 2 Old Lane Gardens,
Cobham, Surrey KT1 1NN
==============================================================================
10
<PAGE>
EXECUTED and DELIVERED
as a DEED by
and
for and on behalf of
ARMOR HOLDINGS, INC
EXECUTED and DELIVERED
as a DEED by ALASTAIR MORRISON
in the presence of:
EXECUTED and DELIVERED
as a DEED by RICHARD BETHELL
in the presence of:
EXECUTED and DELIVERED
as a DEED by
MARTIN BRAYSHAW
in the presence of:
EXECUTED and DELIVERED
as a DEED by
as duly authorised attorney
for and on behalf of
ALAN GOLACINSKI
EXECUTED and DELIVERED
as a DEED by
as duly authorised attorney
for and on behalf of
WILLIAM DANIELL
11
<PAGE>
EXECUTED and DELIVERED
as a DEED by
as duly authorised attorney
for and on behalf of
MIKHAIL GOLOVATOV
EXECUTED and DELIVERED
as a DEED by
as duly authorised attorney
for and on behalf of
NOEL PHILP
EXECUTED and DELIVERED
as a DEED by
as duly authorised attorney
for and on behalf of
DAVID ABBOT
SIGNED by ASHURST MORRIS CRISP
12
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is made and entered into
as of April 16, 1997, among ARMOR HOLDINGS, INC., a Delaware corporation (the
"Issuer"), and those stockholders of the Company which are signatories hereto
(collectively, the "Stockholders" and individually, a "Stockholder").
WHEREAS, each Stockholder is the beneficial owner of certain
Registrable Securities (as defined below) issued by the Issuer;
WHEREAS, the Issuer, together with its wholly-owned
subsidiary Armor Holdings Limited ("Limited"), have acquired the outstanding
share capital of DSL Group Limited ("DSL") (the "Acquisition").
NOW, THEREFORE, in consideration of the premises and mutual
covenants and obligations hereinafter set forth, the Issuer and the
Stockholders, intending legally to be bound, hereby covenant and agree, as
follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:
"Affiliate" of any person shall mean any other person who
either directly or indirectly is in control of, is controlled by, or is under
common control with such person, and "Affiliated" shall have the corresponding
meaning; provided, that for purposes of this definition, an investment entity
shall be deemed to be controlled by each of its investment manager, investment
advisor or general partner.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day in the City of New York or London on which banks are
authorized to close.
"Common Stock" shall mean the common stock, par value $.01
per share, of the Issuer.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Holder" shall mean any Stockholder and any Person that
acquires Registrable Securities from any Stockholder, including the successors
and assigns of any Stockholder that acquires Registrable Securities, directly
or indirectly, from such Person. For purposes of
<PAGE>
this Agreement, the Issuer may deem the registered holder of a Registrable
Security as the Holder thereof.
"Person" shall mean an individual, partnership, limited
partnership, corporation, limited liability company, joint venture, trust or
unincorporated organization, a government or agency or political subdivision
thereof or any other entity.
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by a prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including but not limited to post-effective
amendments and all material incorporated by reference in such prospectus.
"Registrable Securities" shall mean the Common Stock issued
in respect of the Acquisition and any other shares of Common Stock or other
securities of the Issuer issued or issuable as a result of, or in connection
with, any combination of shares, recapitalization, reclassification, merger or
consolidation, exchange or distribution in respect of the shares of Common
Stock issued in respect of the Acquisition Agreement. For purposes of this
Agreement, a Registrable Security ceases to be a Registrable Security when
either (x) it has been registered under the Securities Act and sold or
distributed to any Person pursuant to an effective Registration Statement
covering it or (y) it has been sold or distributed to any Person pursuant to
Rule 144 or Rule 145(d) and, certificates representing any such security have
been issued free of a Securities Act restrictive legend.
"Registration Statement" shall mean any Registration
Statement which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus included therein, all
amendments and supplements to such Registration Statement, including but not
limited to post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
"Rule 144" and "Rule 145" shall mean, respectively, Rule 144
and Rule 145, each promulgated under the Securities Act, as amended from time
to time, or any similar successor rule thereto that may be promulgated by the
SEC.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"SEC" shall mean the Securities and Exchange Commission.
"Selling Holder" shall mean with respect to a Registration
Statement any Holder or Electing Holder whose securities are included in such
Registration Statement.
Capitalized terms not otherwise defined herein shall be the
same meanings herein as set forth in the Agreement among Issuer, Limited and
DSL, dated the same date as
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<PAGE>
this Agreement, for the sale and purchase of the outstanding capital stock of
DSL (the "Acquisition Agreement").
SECTION 2. REGISTRATION RIGHTS.
(a) Demand Registration Rights. Subject to the
provisions of the second to last sentence of this Paragraph (a) if at any time
after the closing of the Acquisition, the Issuer shall receive written notice
(a "Demand") from Holders ("Electing Holders") holding at least fifty percent
(50%) of the Registrable Securities outstanding at the time such Demand is
made, that the Holders desire to register under the Securities Act all of the
Registrable Securities held by such Electing Holders under circumstances that
would require the filing of a Registration Statement under the Securities Act,
the Issuer shall promptly upon receipt of such Demand give notice to all of
the non-Electing Holders ("Other Holders"). Upon the receipt of such notice by
an Other Holder, such Other Holder shall have until 5:00 p.m., New York City
time on the next Business Day following the date such notice is given by the
Issuer to request that the Issuer include in such Registration Statement all
Registrable Securities held by such Other Holder by giving notice to the
Issuer in accordance with Section 8, whereupon such Other Holder shall be
deemed to be an Electing Holder. Except as set forth in Section 2(b) hereof,
any other Holder failing to timely request that his shares of Registrable
Securities be included in such Registration Statement shall thereafter have no
further rights to seek registration of his Common Stock pursuant to this
Agreement. All shares of Registrable Securities which Holders request be
included in such Registration Statement are herein referred to as the "Shares"
and such Holders shall thereupon be included as Electing Holders, with respect
to the Shares. The Issuer shall then prepare and file with the SEC an
appropriate Registration Statement under the Securities Act, which shall be on
Form S-3 if available to the Issuer, with respect to the Shares as soon as
practicable thereafter and in any event within thirty (30) days of the Demand
being served. As soon as practicable, and in any event by July 10, 1997, the
Issuer shall cause to be published combined operating results of the Issuer,
including at least thirty days of combined sales and net income of Issuer, its
consolidated subsidiaries and DSL and its consolidated subsidiaries following
the Completion Date (the "Combined Results"). The Issuer will use its best
efforts to cause the Registration Statement to be declared effective as soon
as practicable after publication of the Combined Results. The Holders
collectively shall be entitled to one (1) demand registration right pursuant
to this Agreement. In the event a Registration Statement filed pursuant this
Agreement is subsequently withdrawn at the request of the majority of the
Electing Holders, such Registration Statement shall nonetheless be deemed to
be the sole demand registration right granted hereunder, and the Electing
Holders shall have no further rights hereunder.
(b) "Piggyback" Registration Rights. At any time
within one (1) year after the Completion Date, the Issuer shall, at least ten
(10) days prior to the filing of any Registration Statement under the
Securities Act (other than a registration statement filed pursuant to Section
2 (a) hereof or on a Form S-8 or Form S-4 or any successor form) relating to a
public offering of the Issuer's Common Stock after Jonathan Spiller has sold,
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<PAGE>
transferred or disposed following the Completion Date, or proposes to sell,
transfer, or dispose of, shares of Common Stock held by him in excess of
64,666 shares, give written notice of such proposed filing and the proposed
date thereof to the Holders that own Registrable Securities, in accordance
with Section 8. If, on or before 5:00 p.m. New York City time on the tenth
(10th) day following the date on which such notice is given, the Issuer shall
receive a written request from any of such Holders requesting that the Issuer
include among the securities covered by such Registration Statement that
amount of Registrable Securities owned by such Holder equal to the "Selling
Shareholder Percentage" of the Registerable Securities held by such Holder
(the "Piggyback Shares"), then the Issuer shall include such Piggyback Shares
in such Registration Statement. The "Selling Shareholder Percentage" shall
equal 100 multiplied by a fraction whose numerator shall be such number of
shares of Common Stock sold, transferred or disposed following the Completion
Date, or proposed to be sold, transferred or disposed of by Mr. Spiller in
excess of 64,666 and whose denominator shall be 581,994. In the event that, in
the reasonable opinion of the managing underwriter of such public offering,
the full amount of the Piggyback Shares cannot be included in the Registration
Statement, the number of Piggyback Shares to be included in such Registration
Statement shall be reduced among the Holders seeking to register Registrable
Securities pro rata in accordance with the number of Registerable Securities
sought to be registered by such Holders. The Holders shall collectively be
entitled to an unlimited number of piggyback registrations pursuant to this
Section 2(b).
(c) Terms and Conditions of Registration. In
connection with any Registration Statement filed pursuant to this Agreement
the following provisions shall apply:
(i) The Holders seeking to register Shares
or Piggyback Shares, as the case may be, will promptly provide the Issuer with
such information, required by the Securities Act and the rules and regulations
promulgated thereunder, about the Holders and their respective Affiliates, as
the Issuer shall reasonably request in order to prepare such Registration
Statement.
(ii) All expenses incident to the Issuer's
performance of or compliance with this Agreement or related to the preparation
and filing of the Registration Statement shall be paid by the Issuer,
including (except as set forth below) registration and filing fees and
expenses, fees and expenses of compliance with federal and state securities
laws, expenses of printing and fees and disbursements of Issuer's counsel and
Issuer's independent auditors, but excluding: (x) the underwriter commissions
related to the Shares or Piggyback Shares, (y) the Holders or Electing Holders
own legal fees, and (z) in the case of a Registration Statement filed pursuant
to Section 2(b), the SEC filing fee (in addition to (x) and (y) above). In
each case such fees and expenses shall be borne by the Electing Holders or
Holders pro rata in accordance with the number of Shares sought to be
registered by them.
(iii) Following the effective date of a
Registration Statement, the Issuer shall, upon the request of the Holders who
are registering Registrable Securities in
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<PAGE>
such Registration Statement, forthwith supply such number of Prospectuses
(including preliminary prospectuses and amendments and supplements thereto)
meeting the requirements of the Securities Act and such other documents as are
referred to in the Prospectus as shall be reasonably requested by such Holders
to permit a public distribution of their Registrable Securities provided that
such Holders furnish the Issuer with such appropriate information relating to
their intentions in connection therewith as the Issuer shall reasonably
request in writing.
(iv) The Issuer shall prepare and file
such amendments and supplements to any Registration Statement filed pursuant
to this Agreement as may be necessary to keep such Registration Statement
effective and to comply in a timely manner with the provisions of the
Securities Act, the Exchange Act and applicable "Blue Sky" laws with respect
to the offer and sale or other disposition of the Registrable Securities
covered by such Registration Statement during the period set forth in Section
2(c)(vii) or required for distribution of the Piggyback Shares, as applicable
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement
or supplement to the Prospectus.
(v) The Electing Holders may select the
underwriter or underwriters, if any, who are to undertake the offering and
distribution of the Registrable Securities included in the Registration
Statement filed pursuant to Section 2(a) hereof, subject to the Issuer's prior
approval of the underwriter, which approval shall not be unreasonably
withheld.
(vi) The Issuer shall use its best efforts
to register the Shares of the Electing Holders covered by any such
Registration Statement filed pursuant to Section 2(a) hereof under such
securities or Blue Sky laws in such jurisdictions as the Electing Holders may
reasonably request; provided, however, that the Issuer shall not be required
to (A) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph (vi) or (B) consent
to general service of process in any such jurisdiction.
(vii) The Issuer shall use its best
efforts to keep a Registration Statement filed pursuant to the Section 2(a)
continuously effective for a period of 24 months following the date the
Registration Statement is declared effective or the sale by the Institutional
Vendors of all of their Registrable Securities, whichever shall first occur,
and provide all requisite financial statements for the periods specified in
this Section 2, as applicable. Upon the occurrence of any event that would
cause any Registration Statement or a Registration Statement filed pursuant to
Section 2(b) or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for resale of
Registrable Securities during the period required by this Agreement, the
Issuer shall so notify the Holders whose Registrable Securities are included
in such Registration
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<PAGE>
Statement and shall file promptly an appropriate amendment to such
Registration Statement, (1) in the case of clause (A), correcting any such
misstatement or omission, and (2) in the case of clauses (A) and (B), use its
best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as practicable thereafter.
(viii) The Issuer shall advise the Selling
Holders promptly (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any Registration
Statement or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the SEC for amendments to the Registration
Statement or amendments or supplements to the Prospectus, (C) of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statement under the Securities Act or of the suspension by any state
securities commission of the qualification of the Registrable Securities for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any of the preceding purposes. If at any time the SEC shall issue any stop
order suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Registrable Securities under state securities or Blue Sky laws, the Issuer
shall use its best efforts to obtain the withdrawal or lifting of such order
as soon as practicable.
(ix) Upon request by any Electing Holder,
the Issuer shall furnish to each Electing Holder named in the Registration
Statement or Prospectus to be filed pursuant to the Section 2(a) herein before
filing with the SEC and any underwriter, copies of any Registration Statement
or any Prospectus included therein or any amendments or supplements to any
such Registration Statement or Prospectus which documents will be subject to
the review and comment of such Electing Holders for a period of at least two
Business Days. The Issuer will not file any such Registration Statement or
Prospectus or any amendment or supplement to such Registration Statement or
Prospectus to which the selling Holders of the Registrable Securities covered
by such Registration Statement or the underwriter(s) in connection with such
sale, if any, shall reasonably object within two Business Days after the
receipt thereof.
(x) The Issuer shall if requested by any
Electing Holders or the underwriter(s) in connection with such sale, if any,
promptly include in any Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as such
Electing Holders and underwriter(s), if any, may reasonably request to have
included therein, including, without limitation, Registrable Securities,
information with respect to the amount of Registrable Securities being sold to
such underwriters(s), the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Issuer is notified
of the matters to be included in such Prospectus supplement or post-effective
amendment.
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<PAGE>
(xi) The Issuer shall furnish to each
Selling Holder, or underwriter, if any without charge, at least one copy of
the Registration Statement, as first filed with the SEC and of each amendment
thereto, including all documents incorporated by reference therein and all
exhibits (including exhibits incorporated therein by reference).
(xii) Subject to receipt of an opinion of
counsel to a Selling Holder which is satisfactory in form and substance to
counsel to the Issuer, the Issuer shall in connection with any sale of
Registrable Securities that will result in such securities no longer being
Restricted Securities, as defined in Rule 144 promulgated under the Securities
Act, cooperate with the selling Holders and the underwriter(s), if any, to
facilitate the preparation and delivery of certificates representing such
securities to be sold and not bearing any restrictive legends to permit
delivery of the related transaction.
(xiii) The Issuer shall use reasonable
efforts to cause the disposition of the Registrable Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller
or sellers thereof or the underwriter(s), if any, to consummate the
disposition of such Registrable Securities, subject to the proviso contained
in clause (vi) above.
(xiv) The Issuer shall cooperate and
assist in any filings required to be made with the NASD and in the performance
of any reasonable due diligence investigation by any Electing Holder or
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD.
(xv) The Issuer shall provide promptly to
each selling Holder upon request each document filed with the SEC pursuant to
the requirements of Section 13 or Section 15(d) of the Securities Exchange Act
of 1934.
(xvi) Each Selling Holder agrees that,
upon receipt of the notice referred to in Section 2(c)(vii) or any notice from
the Issuer of the existence of any fact of the kind described in Section
2(c)(viii) hereof, such Selling Holder will forthwith discontinue disposition
of Registrable Securities pursuant to the applicable Registration Statement
until such Selling Holder's receipt of the copies of a supplemented or amended
Prospectus, or until it is advised in writing by the Issuer that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (the
"Advice"). If so directed by the Issuer, each Selling Holder will dispose of
all copies, other than permanent file copies then in such Selling Holder's
possession, of the Prospectus covering such Registrable Securities that was
current at the time of receipt of either such notice. In the event the Issuer
shall give any such notice, the time period regarding the effectiveness of
such Registration Statement set forth in Section 2(c)(vii) shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 2(c)(vii) or Section
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<PAGE>
2(c)(viii) hereof to and including the date when each Selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus or shall have received the Advice.
(xvii) The Issuer will file the reports
required to be filed by it under the Securities Act and the Exchange Act of
1934, as amended and the rules and regulations promulgated thereunder and will
take such further action as any Electing Holders of Registrable Securities may
reasonably request, all to the extent required from time to time to enable
such Electing Holder to sell Registrable Securities without registration under
the Securities Act within the limitations of the exemptions provided by: (i)
Rule 144, as such Rule may be amended from time to time or (ii) a similar rule
or regulation thereafter adopted by the SEC.
(xviii) The Issuer agrees that the
Electing Holders can appoint an underwriter reasonably acceptable to the
Issuer, and the Issuer agrees to negotiate and enter into a customary
underwriting agreement with such underwriter that is reasonably acceptable to
the Issuer, and the Issuer shall take further action reasonably requested by
such underwriter in order to facilitate the registration and disposition of
such Registrable Securities in any underwritten offering to be made of
Registrable Securities in accordance with this Agreement. In addition, the
Issuer shall cooperate in the performance of any reasonable due diligence
investigation by a representative of the Electing Holders and any managing
underwriter including making available for inspection necessary corporate
documents and records, and the Issuer shall make available company personnel
for discussion of such investigation. If the Issuer shall receive any legal
opinions, auditors opinions or comfort letters in connection with the
registration of any Registrable Securities, it shall provide copies of the
same to a representative of the Electing Holders where permitted, provided
that, if not permitted, the Issuer shall seek such permission.
(d) Indemnification
(i) The Issuer agrees to indemnify and
hold harmless (i) each Holder and (ii) each person, if any, who controls
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective of officers, directors, partners, employees, representatives and
agents of any Holder or any controlling person (any person referred to in
clause (i), (ii) or (iii) may hereinafter be referred to as an "Indemnified
Holder"), to the fullest extent lawful, joint and several from and against any
and all losses, claims, damages, liabilities, judgments, actions and expenses,
joint or several (including without limitation and as incurred, reimbursement
of all reasonable costs of investigating, preparing, pursuing or defending any
claim or action, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, including the reasonable fees and expenses
of counsel to any Indemnified Holder) directly or indirectly caused by,
related to, based upon, arising out of or in connection with any untrue
statement or alleged untrue statement of a material fact contained in any
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<PAGE>
Registration Statement, preliminary prospectus or Prospectus (or any amendment
or supplement thereto), or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation of the Issuer of any rule
or regulation under the Securities Act except insofar as such losses, claims,
damages, liabilities or expenses are caused by an untrue statement or omission
or alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to any of the Holders furnished in
writing to the Company by any of the Holders expressly for use therein.
In case any action or proceeding (including any governmental
or regulatory investigation or proceeding) shall be brought or asserted
against any of the Indemnified Holders with respect to which indemnity may be
sought against the Company, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Company in
writing (provided, that the failure to give such notice shall not relieve the
Company of any liability which it may have pursuant to this Agreement except
to the extent that such failure to give notice damages the Company solely as a
result of the failure to provide timely notice). Such Indemnified Holder shall
have the right to employ its own counsel in any such action and the fees and
expenses of such counsel shall be paid, as incurred, by the Company
(regardless of whether it is ultimately determined that an Indemnified Holder
is not entitled to indemnification hereunder). The Company shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for such Indemnified
Holders, which firm shall be designated by the Holders. The Company shall be
liable for any settlement of any such action or proceeding effected with the
Company's prior written consent, which consent shall not be withheld
unreasonably, and the Company agrees to indemnify and hold harmless each
Indemnified Holder from and against any loss, claim, damage, liability or
expense by reason of any settlement of any action effected with the written
consent of the Company. The Company shall not, without the prior written
consent of each Indemnified Holder, settle or compromise or consent to the
entry of judgment in or otherwise seek to terminate any pending or threatened
action, claim, litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any Indemnified Holder is
a party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Holder from all
liability arising out of such action, claim, litigation or proceeding.
(ii) Each Holder of Registrable Securities
agrees, severally and not jointly, to indemnify and hold harmless the Company,
and its directors, of officers, and any person controlling (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) the
Company, and the respective officers, directors, partners, employees,
representatives and agents of each such person, to the same extent as the
foregoing indemnity from the Company to each of the Indemnified Holders, but
only with respect to claims and actions based on information relating to such
Holder furnished in
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writing by such Holder expressly for use in any Registration Statement. In
case any action or proceeding shall be brought against the Company or its
directors or officers or any such controlling person in respect of which
indemnity may be sought against a Holder of Registrable Securities, such
Holder shall have the rights and duties given the Company, and the Company,
such directors or officers or such controlling person shall have the rights
and duties given to each Holder by the preceding paragraph. In no event shall
any Holder be liable or responsible for any amount in excess of the amount by
which the total received by such Holder with respect to its sale of
Registrable Securities pursuant to a Registration Statement exceeds (i) the
value of the Registrable Securities received by such Holder on Completion,
determined as set forth in the definition of Consideration Shares in the
Acquisition Agreement and (ii) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(iii) If the indemnification provided for
in this Section 2(d) is unavailable to an indemnified party under Section
2(d)(i) or Section 2(d)(ii) hereof (other than by reason of exceptions
provided in those Sections) in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate
to reflect the relative fault of the Company, on the one hand, and of the
Indemnified Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and of the Indemnified Holder, on the
other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or by the Indemnified Holder and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in the second
paragraph of Section 2(d)(i), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any
action or claim.
The Company and each Holder of Registrable Securities agree
that it would not be just and equitable if contribution pursuant to this
Section 2(d)(iii) were determined by pro rata allocation (even if the Holders
were treated as one entity for such purpose) or by any other method of
allocation which does not take account the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
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<PAGE>
Notwithstanding the provisions of this Section 2(d), no Holder or its related
Indemnified Holders shall be required to contribute, in the aggregate, any
amount in excess of the net proceeds received by such Holder with respect to
the sale of its Registrable Securities pursuant to a Registration Statement.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 1 l(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Holders' obligations to contribute pursuant to this Section 2(d)(iii) are
several in proportion to the respective numbers of shares of Common Stock
issued to them pursuant to the Acquisition Agreement hereunder and not joint.
SECTION 3. COOPERATION WITH THE ISSUER. The offering and
sale of Shares or Piggyback shares, as the case may be, by any Holder shall
comply in all material respects with the applicable terms, provisions and
requirements set forth in this Agreement and any such Holder shall cooperate
with the Issuer in respect thereof in a timely fashion.
SECTION 4. NO INCONSISTENT AGREEMENTS. The Issuer will not,
on or after the date of this Agreement, enter into any agreement with respect
to its securities that is inconsistent with the rights granted to the Holders
in this Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Issuer's
securities under any agreement in effect on the date hereof.
SECTION 5. POST-REGISTRATION OBLIGATIONS.
(a) Restrictions on the Issuer. From the date
hereof and continuing for a period of 120 days from the date on which a
Registration Statement filed pursuant to Section 2(a) is declared effective by
the SEC (the "Restricted Period"), the Issuer may not, without the written
consent of the Electing Holders, offer, sell, transfer or otherwise dispose of
or issue any Common Stock or other securities convertible or exchangeable for
Common Stock until the earlier of: (i) the receipt by all of the Electing
Holders of a bona fide offer to purchase all of their Registrable Securities
at a price not less than $8.56 per share whether or not such offer is accepted
by all of the Electing Holders or (ii) the Issuer has offered in writing to
the Electing Holders to participate in any private placement or underwritten
public offering (the "Offering") of the Issuer's Common Stock on a pari passu
basis with the Issuer provided: (x) the price per share of the Offering (the
"Offering Price") is at least equal to $8.56 per share and the Offering Price
is equal to or greater than 85% of the average closing price of the Common
Stock on the American Stock Exchange computed over the twenty trading days
immediately prior to the date the underwriting agreement is signed by the
Electing Holder with respect to the Offering and (y) to the extent that, in
the opinion of the underwriter, all of the Shares requested to be registered
by the Issuer and the Electing Holders cannot be sold in an Offering, then all
of the Shares of the Electing Holders registered pursuant to the Registration
Statement shall be sold prior to the sale of any shares of the Issuer at the
offering price. Notwithstanding the foregoing sentence, nothing contained in
this Agreement shall restrict the Issuer, or any subsidiary of the Issuer from
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<PAGE>
offering, selling, transferring or otherwise disposing of or issuing Common
Stock in connection with the Issuer's contemplated acquisition of Gorandel
Trading Ltd. or outstanding contractual obligations, including the issuance of
Common Stock upon the exercise of options or conversion of any outstanding
convertible securities. Each Electing Holder shall notify the Issuer in
writing within five Business Days of receipt of the offer from the Issuer to
participate in the Offering of its intention to participate in the Offering
("Notice of Participation"), or the offer of the Issuer shall be deemed to
have been declined. If the Electing Holders receive an offer pursuant to
Section 5(a)(i) and reject such an offer then the Issuer shall be released
from any restrictions on the offer, sale, transfer, disposition or issuance of
Common Stock contained in this Section 5(a); provided, however, the Electing
Holders shall nonetheless continue to have the right to have their Common
Stock included in any underwritten public offering of the Issuer's Common
Stock during the Restricted Period on a pari passu basis with the Issuer,
subject to the condition set forth in Section 5(a)(ii)(y) at the offering
price.
(b) Restrictions on Electing Holders. If any
Electing Holder declines to participate in an Offering pursuant to Section
5(a)(ii) by failing to timely deliver a Notice of Participation, then for a
period of ninety (90) days starting on the sixth business day following
receipt by such Electing Holder of an offer by the Issuer given pursuant to
Section 5(a)(ii), such Electing Holder shall not offer, sell, transfer or
otherwise dispose of any Registrable Securities in any transaction either
public or private. Upon the expiration of such ninety day period, for an
additional period of ninety (90) days thereafter all Registrable Securities
sold by such Electing Holder shall be sold by such Electing Holder through the
underwriter selected by the Issuer to conduct the Offering, as such
underwriter may determine in its discretion provided it shall use its
reasonable efforts in connection with such sale.
(c) Coordination of Sales Activities. The Issuer
and Electing Holders agree to use their best efforts to inform the other party
as to any offer made to such party with regard to the Common Stock so as to
effect the provisions of this Section 4.
SECTION 6. AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this Section 6, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Issuer has obtained the prior
written consent of the Holders of a majority of the Registrable Securities at
the time of any such amendment.
SECTION 7. REMEDIES. Each Holder having rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically or to recover damages or to exercise any other remedy available
to it at law or in equity. The foregoing rights and remedies shall be
cumulative and the exercise of any right or remedy provided herein shall not
preclude any Person from exercising any other right or remedy provided herein.
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<PAGE>
SECTION 8. NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing by facsimile
transmission, hand-delivery, registered first-class mail, return receipt
requested, telex, or air-courier guaranteeing overnight delivery and shall be
effective upon receipt:
(a) If to a Holder, at the most current address
given by such Holder to the Issuer in accordance with the provisions of this
Section 8, which address initially is, with respect to each Holder, the
address set forth on Schedule I of this Agreement.
(b) If to the Issuer, initially at its address set
forth on Schedule I of this Agreement and thereafter at such other address as
may be designated from time to time by notice given in accordance with the
provisions of this Section 8.
SECTION 9. SUCCESSORS AND ASSIGNS. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto, including any successors by merger to the Issuer.
SECTION 10. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
SECTION 11. HEADINGS; CONSTRUCTION. The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. Unless the context otherwise requires,
all references to Sections are to Sections of this Agreement, "or" is
inclusively disjunctive, and words in the singular include the plural and vice
versa. In computing any period of time specified in this Agreement or in any
notices, the date of the act or event from which such period of time is to be
measured shall be included, any such period shall expire at 5:00 p.m., New
York City time, on the last day of such period.
SECTION 12. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New
York, without regard to the principles of the conflict of laws thereof.
SECTION 13. JURISDICTION; FORUM.
(a) Each party hereto consents and submits to the
jurisdiction of any state court sitting in the County of New York or federal
court sitting in the Southern District of the State of New York in connection
with any dispute arising out of or relating to this Agreement. Each party
hereto waives any objection to the laying of venue in such courts and any
claim that any such action has been brought in an inconvenient forum. To the
extent permitted by law, any judgment in respect of a dispute arising out of
or relating to this Agreement may be enforced in any other jurisdiction within
or outside the United States by
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<PAGE>
suit on the judgment, a certified copy of such judgment being conclusive
evidence of the fact and amount of such judgment.
(b) Each party hereto agrees that personal service
of process may be effected by any of the means specified in Section 8,
addressed to such party. The foregoing shall not limit the rights of any party
to serve process in any other manner permitted by law.
SECTION 14. SEVERABILITY. If one or more of the provisions
hereof, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect, for any reason, the validity,
legality and enforceability of the remaining provisions hereof shall not be in
any way affected or impaired thereby, and the provision held to be invalid,
illegal or unenforceable shall be reformed to the minimum extent necessary,
and in a manner as consistent with the purposes thereof as is practicable, so
as to render it valid, legal and enforceable, it being intended that all of
the rights and privileges of the Holders hereunder shall be enforceable to the
fullest extent permitted by law.
SECTION 15. ENTIRE AGREEMENT. This Agreement is intended by
the parties hereto as a final expression of their agreement and is intended to
be a complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein. There
are no restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
SECTION 16. STOCK LEGEND. The Issuer shall cause its counsel
to provide, at Issuer's expense, any legal opinions reasonably required by the
transfer agent of the Issuer upon transfer of Registrable Securities in
connection with transfers (including pledges) pursuant to Rule 144 under the
Securities Act and removal of Securities Act legend on certificates
representing such Securities which are not the subject for an effective
Registration Statement, provided that the Holder of such Securities provides
such counsel with appropriate representation letters from such Holder and its
broker, a copy of a duly filed Form 144, if required, and such other back up
certificates and documentation reasonably requested by such counsel.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
By:
----------------------------------
Name:
Title:
HOLDERS:
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<PAGE>
Schedule I
Addresses
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<PAGE>
Exhibit 10.4
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
THIS AGREEMENT is made this 26th day of March, 1997, between ARMOR
HOLDINGS, INC., a Delaware corporation (the "Borrower"), and BARNETT BANK, N.A.
(the "Bank").
RECITALS
--------
The Bank has provided a credit facility to the Borrower pursuant to a
Loan Agreement (as amended from time to time, the "Loan Agreement") dated
November 14, 1996, by and between the Borrower and the Bank. The Bank has
approved certain modifications to the credit facility, and the parties wish to
amend and restate the Loan Agreement to set forth their understanding
concerning the credit facility provided, or to be provided, by the Bank to the
Borrower.
NOW, THEREFORE, for good and valuable consideration, the parties
hereby amend and restate the Loan Agreement so that, from and after the date
hereof, the Loan Agreement shall read as follows:
ARTICLE I
BORROWING AND PAYMENT
---------------------
1.01 Revolving Credit Advances.
(a) The Bank hereby establishes in favor of the Borrower a
revolving line of credit. The Borrower shall be entitled to borrow,
repay and reborrow funds from the Bank in accordance with the terms
hereof so long as the total principal amount owed to the Bank under
the revolving line of credit does not exceed $20,000,000.00 (or such
lesser amount as is set forth herein) during the Revolving Period (as
defined herein). The Bank's obligation to make advances hereunder
shall terminate at the expiration of the Revolving Period.
(b) The Borrower's indebtedness under the revolving line of
credit shall be evidenced by a Renewal Promissory Note of even date
herewith (as amended, extended or renewed from time to time, the
"Note") executed by the Borrower in favor of the Bank in the original
principal amount of $20,000,000.00. The Note shall bear interest at
the rate set forth therein and shall be payable as set forth therein.
(c) The Bank shall make each advance under the revolving line of
credit upon notice from the Borrower to the Bank specifying the date
and amount of the advance. The Bank must receive the notice not later
than 12:00 noon (Eastern time) on the business day of the advance.
Alternatively, the Borrower may request advances by drawing checks on
a deposit account which is linked to the credit facility hereunder in
accordance with disbursement arrangements that are mutually
satisfactory
<PAGE>
to the parties. The Bank will make each requested advance available to
the Borrower not later than the close of business on the business day
of the request by crediting the Borrower's account maintained with the
Bank in the amount of the advance if as of such time: (i) the Bank's
obligation to make advances hereunder has not terminated or expired;
(ii) a Default or Event of Default (as defined herein) has not
occurred; and (iii) all conditions to the advance set forth herein or
in any other Loan Documents (as defined herein) have been satisfied.
(d) For purposes hereof, the term "Revolving Period" shall have
the meaning ascribed thereto in the Note.
1.02 Acceptances. Subject to the terms set forth herein and in that
certain Acceptance Credit Agreement (as amended or restated from time to time,
the "Acceptance Agreement") dated November 14, 1996, between the Borrower and
the Bank, the Bank shall from time to time during the Revolving Period make
available to the Borrower an acceptance facility pursuant to which the Bank may
accept drafts drawn upon it by the Borrower (each, an "Acceptance"). The
aggregate face amount of outstanding Acceptances shall not at any one time
exceed $5,000,000 (or such lesser amount as is set forth herein). The Bank
shall not be required to create any Acceptance which has a maturity date after
the expiration of the Revolving Period. Upon the Bank's payment of an
Acceptance upon maturity thereof, the Bank may at its option obtain an advance
under the Note (without further notice to or consent of the Borrower) to
reimburse the Bank for such payment. If the Bank elects not to obtain an
advance under the Note or if credit in the amount of the Acceptance is not then
available under the Note, the Borrower shall immediately upon demand reimburse
the Bank for the face amount of each Acceptance upon the maturity thereof
together with such other amounts as may be due in connection therewith in
accordance with the Acceptance Agreement. The parties acknowledge that the Bank
may at any time sell, discount, rediscount or otherwise dispose of any
Acceptances. The Borrower shall pay the Bank such fees and costs in connection
with the Acceptances as are set forth in the Acceptance Agreement.
1.03 Letters of Credit. The Bank may from time to time, in its
discretion, issue letters of credit (the "Letters of Credit") for the
Borrower's account. For purposes of this Agreement, the amount of outstanding
Letters of Credit shall include: (a) amounts available for draws under
outstanding Letters of Credit (whether or not such draws are subject to
satisfaction of prior conditions); and (b) the amount of any draws under
Letters of Credit for which the Bank has not received reimbursement. The
Borrower shall request Letters of Credit by giving the Bank written notice of
each request at least two business days prior to the issuance of the Letter of
Credit. The Borrower shall, with such request, complete an application in form
acceptable to the Bank and execute such
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<PAGE>
terms, conditions and reimbursement agreements (each, a "Reimbursement
Agreement") concerning the Letter of Credit as the Bank may require. No Letter
of Credit shall be issued which could be drawn on after the expiration of the
Revolving Period. In the event of a draw on a Letter of Credit, the Bank may at
its option obtain an advance under the Note (without further notice to or
consent of the Borrower) to reimburse the Bank for such draw. If the Bank
elects not to obtain an advance under the Note or if credit in the amount of
the draw is not then available under the Note, the Borrower shall immediately
upon demand reimburse the Bank for the amount of the draw together with
interest thereon and such other amounts as may be due under any applicable
Reimbursement Agreement. The Bank shall not in any event be required to issue a
Letter of Credit during the continuance of a Default or Event of Default
hereunder. The Borrower shall pay the Bank such issuance fees as the Bank may
establish with respect to each Letter of Credit. Nothing set forth herein or
otherwise shall obligate the Bank to issue Letters of Credit hereunder, and the
Bank may at any time in its discretion elect not to issue a Letter of Credit.
1.04 Loan Documents and Related Terms.
(a) The indebtedness (the "Indebtedness") now or hereafter
evidenced by the Note, the Acceptance Agreement and each Reimbursement
Agreement shall: (i) be secured by a first priority lien pursuant to
the Amended and Restated Security Agreement (as amended or restated
from time to time, the "Security Agreement") dated March 26, 1997,
executed by the Borrower and the Bank covering the Borrower's
inventory, accounts receivable, equipment, general intangibles and
other assets described therein; (ii) be secured by a first priority
lien pursuant to the Pledge Agreement (as amended or restated from
time to time, the "Pledge Agreement") dated March 26, 1997, executed
by the Borrower in favor of the Bank covering the securities and other
assets described therein; and (iii) be guaranteed by each of the
Borrower's Subsidiaries as of March 26, 1997, pursuant to guaranties
(collectively, as amended or restated from time to time, the
"Guaranties") executed by such Subsidiaries in favor of the Bank. The
Guaranties and the Indebtedness shall be secured by: (i) Amended and
Restated Security Agreements (collectively, as amended or restated
from time to time, the "Subsidiary Security Agreements") dated March
26, 1997, executed by each of the Borrower's Subsidiaries as of such
date in favor of the Bank covering the inventory, receivables and
other assets of such Subsidiaries described therein; (ii) Collateral
Assignments (collectively, as amended or restated from time to time,
the "Subsidiary Collateral Assignments") dated March 26, 1997,
executed by NIK Public Safety, Inc. ("NIK") and Defense Technology
Corporation of America ("DTC") as of such date in favor of the Bank
covering the patents, trademarks and other assets of such Subsidiaries
described therein; and (iii)
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<PAGE>
Pledge Agreements (as amended or restated from time to time, the
"Subsidiary Pledge Agreements") executed by the Borrower's
Subsidiaries from time to time pursuant to subparagraph (b) (ii)
below. The Borrower and each such Subsidiary shall execute and deliver
such financing statements and other documents as the Bank may
reasonably request to perfect and continue perfection of the Bank's
liens. The Borrower has executed and delivered an Environmental
Agreement (as amended or restated from time to time the "Environmental
Agreement") dated November 14, 1996, in favor of the Bank. If at any
time hereafter the Borrower or any Included Subsidiary (as defined
herein), in addition to NIK and DTC, acquires or holds any patents or
trademarks, or applications therefor, that are filed or registered
with the United States Patent and Trademark Office, or any other
governing agency or body, then the Borrower or such Subsidiary, as the
case may be, shall execute a collateral assignment (each, as amended
or restated from time to time, a "Collateral Assignment") covering the
same in form substantially similar to the Subsidiary Collateral
Assignments. The Guaranties, the Subsidiary Security Agreements, the
Subsidiary Collateral Assignments and the Subsidiary Pledge Agreements
shall include, in addition to the Guaranties, Subsidiary Security
Agreements, Subsidiary Collateral Assignments, Collateral Assignments
and Subsidiary Pledge Agreements contemplated in this subparagraph,
all guaranties, security agreements , collateral assignments and
pledge agreements, as the case may be, now or hereafter executed by
any Subsidiaries pursuant to subparagraph (b) below.
(b) For purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Loan Documents" shall mean and include this Agreement
(as amended from time to time), the Note, the Acceptance
Agreement, the Reimbursement Agreements, the Acceptances, the
Letters of Credit, the Security Agreement, the Collateral
Assignments, the Pledge Agreement, the Guaranties, the Subsidiary
Security Agreements, the Subsidiary Collateral Assignments, the
Subsidiary Pledge Agreements, the Environmental Agreement and all
documents related to the foregoing documents.
(ii) "Included Subsidiary" shall mean and include each
Subsidiary that has satisfied the following conditions:
(aa) The Subsidiary has granted the Bank a perfected
security interest in its inventory, equipment, accounts
receivable, general intangibles, patents and trademarks
subject only to
4
<PAGE>
such prior liens and claims as the Bank, in its discretion,
may approve; and
(bb) The Subsidiary has executed the following
documents in favor of the Bank substantially in the form of
such documents executed by the Borrower's Subsidiaries as of
March 26, 1997: (1) Guaranty of Payment; (2) Security
Agreement; (3) Collateral Assignment; (4) Waiver of Jury
Trial; and (5) financing statements (conforming in each case
to the requirements of the applicable jurisdictions where
such statements will be filed). Each such document shall be
deemed to be a Loan Document hereunder; and
(cc) The Bank holds a perfected first priority lien on
all of the issued and outstanding shares of capital stock of
the Subsidiary pursuant to the Pledge Agreement or, if
applicable, pursuant to a pledge agreement substantially
similar to the Pledge Agreement executed by the owner of
such shares in favor of the Bank.
(iii) "Subsidiary" shall mean and include any partnership,
corporation or other entity if the Borrower now or hereafter
directly or indirectly owns or controls a majority of the equity
or voting interests in such partnership, corporation or entity.
(c) For purposes of this Agreement, the plural shall include the
singular, and vice versa, as the context requires.
1.05 Borrowing Limitations. Notwithstanding any contrary provision set
forth herein or in any other Loan Document, the Borrower agrees that the
outstanding principal balance of the Note, when combined with the aggregate
face amount of outstanding Letters of Credit and Acceptances, shall not at any
time exceed $20,000,000. The Borrower shall not be entitled to obtain any
advance under the Note or other credit hereunder if the advance or credit would
result in a violation of the lending limits set forth herein. The outstanding
principal balance of the Note, together with the aggregate face amount of
outstanding Letters of Credit and Acceptances, is referred to herein as the
"Outstanding Credit."
1.06 Facility Fees. The Borrower shall pay the Bank a fee on the daily
average unused amount of the revolving line of credit under the Note for a
period commencing on November 14, 1996, and continuing until the expiration or
termination of the Revolving Period. The fee shall accrue at the rate of
one-eighth of one percent (0.125%) per annum calculated on the basis of a
360-day year (based on actual days elapsed). The Borrower shall pay the fee
quarterly in arrears: (a) within 15 days after the end of each
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<PAGE>
calendar quarter; and (b) on the expiration or termination of the Revolving
Period. In calculating the fee, the amount of outstanding Acceptances shall be
treated as amounts outstanding under the Note.
ARTICLE II
CONDITIONS
----------
2.01 Conditions to Initial Advance. The obligation of the Bank to make
an initial extension of credit hereunder is subject, without limitation, to
satisfaction of the following conditions precedent:
(a) The Bank shall have received on or before March 26, 1997, and
the date of such extension of credit in form reasonably satisfactory
to it: (i) the duly executed Loan Documents; (ii) such evidence of
corporate authorization from the Borrower and each Subsidiary as the
Bank may reasonably require; (iii) good standing certificates
indicating that the Borrower and each Subsidiary are in good standing
in their respective states of incorporation and in any other states
where they are required to qualify to do business; and (iv) certified
articles of incorporation and bylaws of the Borrower and each
Subsidiary.
(b) The Bank shall have received on or before March 26, 1997,
from attorneys for the Borrower reasonably acceptable to the Bank, an
opinion addressed to the Bank in form and substance reasonably
satisfactory to the Bank.
2.02 Conditions to Advances. The obligation of the Bank to make any
advances hereunder or under the Note, or to create any Acceptances, is subject,
without limitation, to satisfaction of the following additional conditions
precedent:
(a) The representations and warranties of the Borrower and each
Subsidiary set forth in this Agreement and in the Loan Documents shall
be true and correct in all material respects on and as of the date of
each such advance or extension of credit.
(b) On the date of each such advance or extension of credit, the
Borrower shall be in compliance with all the material terms and
provisions set forth in this Agreement on its part to be observed or
performed, and no Default or Event of Default shall be continuing
hereunder.
2.03 Other Documents. The Bank shall have received on or before the
date hereof or the date of any advance or credit extension hereunder such other
documents or items as the Bank may reasonably request.
6
<PAGE>
ARTICLE III
AFFIRMATIVE COVENANTS
---------------------
The Borrower as to itself and as to any Subsidiaries covenants and
agrees that from the date hereof:
3.01 Financial Statements of the Borrower. The Borrower will deliver
to the Bank the following:
(a) Within forty-five (45) days after the end of each quarter of
the Borrower's fiscal year (other than the last quarter of each fiscal
year): (i) a balance sheet, income statement and statement of cash
flows for the Borrower and its Subsidiaries on a consolidated basis as
of the end of and for such period in reasonable detail certified by an
authorized officer of the Borrower; and (ii) a balance sheet and
income statement for each of the Borrower and its Subsidiaries on a
stand alone basis for each such entity as of the end of and for such
period in reasonable detail certified by an authorized officer of the
Borrower.
(b) Within ninety (90) days after the end of each fiscal year of
the Borrower, a balance sheet, income statement and statement of cash
flows for the Borrower and its Subsidiaries on a consolidated basis as
of the end of and for such period in reasonable detail, audited and
certified by independent certified public accountants of recognized
national standing, whose opinion thereon shall be reasonably
satisfactory to the Bank in scope and substance.
(c) Within fifteen (15) days after the end of each calendar
quarter, accounts receivable aging schedules and inventory status
reports for the Borrower and each Subsidiary as of the end of such
quarter certified to the Bank by an authorized officer of the
Borrower.
(d) Promptly upon receipt thereof, copies of all management
letters submitted to the Borrower by independent certified public
accountants in connection with each annual or interim audit of the
books of the Borrower by such accountants.
(e) With each delivery required under subparagraphs (a) and (b)
above, a compliance certificate in form approved by the Bank executed
by an executive officer of the Borrower demonstrating compliance with
the Loan Documents.
(f) Promptly upon the occurrence of any Default or Event of
Default, a notice thereof, specifying the nature thereof.
(g) Promptly upon becoming available, a copy of all: (i) reports,
registration statements and other materials filed
7
<PAGE>
with the Securities and Exchange Commission; (ii) all offering
circulars made in connection with any distribution or sale of the
Borrower's securities; and (iii) all notices, proxy statements and
other materials mailed or distributed to the Borrower's shareholders.
(h) Such other material information as the Bank may from time to
time reasonably request.
3.02 Financial Information. All financial information submitted by the
Borrower or any Subsidiary hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect as of the time that such
financial statements are prepared. The Borrower and its Subsidiaries will
maintain books of account in accordance with generally accepted accounting
principles.
3.03 Taxes and Other Charges. The Borrower and the Subsidiaries, as
applicable, will pay and discharge or cause to be paid and discharged all
taxes, charges, liabilities or claims of any type at any time assessed against
or incurred by the Borrower or any Subsidiary, or which could become a lien
against the Borrower or any Subsidiary or any of their properties. Nothing in
this subsection shall require the payment of any such sum if the Borrower by
appropriate proceedings contests the same in good faith and so long as the
Borrower, if required by generally accepted accounting principles, creates a
funded reserve in an amount required by generally accepted accounting
principles.
3.04 Insurance. The Borrower and its Subsidiaries will maintain
adequate insurance with responsible insurers with coverage normally obtained by
businesses similar to that of the Borrower or its Subsidiaries, but covering at
least: (i) damage to physical property from fire and other hazards; (ii)
liability on account of injury to persons; (iii) product liability risks; and
(iv) insurance against theft, forgery or embezzlement or other illegal acts of
officers or employees in reasonable amounts. If requested by the Bank, the
Borrower will provide the Bank, within ninety (90) days after the end of each
fiscal year, a certificate of the Borrower specifying the types and amounts of
insurance in force and the insurers of each risk covered by such insurance.
3.05 Maintenance of Corporate Existence. The Borrower and its
Subsidiaries will do or cause to be done all things necessary to preserve and
keep in full force and effect their existence, franchises, rights and
privileges as corporations under the laws of their states of incorporation and
any other jurisdiction where the conduct of their business or the ownership of
their properties would require them to be qualified to do business (except
where the failure to be so qualified would not have a material adverse effect
on the Borrower and its Subsidiaries, taken as a whole).
8
<PAGE>
3.06 Use of Proceeds. The funds borrowed under the Note shall be used
for working capital purposes, for Permitted Acquisitions and for such other
purposes as the Bank may approve from time to time.
3.07 Notice of Litigation. Promptly after the commencement thereof,
the Borrower shall furnish the Bank notice of all material actions, suits and
proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting the Borrower
or any Subsidiary.
3.08 Notice of ERISA Requirements. As soon as possible and in any
event within thirty (30) days after the Borrower knows or has reason to know
that any reportable event, accumulated funding deficiency, prohibited
transaction, disqualification or termination (as such terms are defined in the
Employee Retirement Income Security Act of 1974, as amended) with respect to
any Plan has occurred, the Borrower shall furnish the Bank with the statement
of the chief financial officer of the Borrower setting forth details as to such
event and the action which the Borrower proposes to take with respect thereto,
together with a copy of the notice of such event to the Pension Benefit
Guaranty Corporation. For purposes of this Agreement, "Plan" shall mean any
employee benefit plan maintained in whole or in part for employees of the
Borrower or its Subsidiaries which is subject to the provisions of Title IV of
the Employee Retirement Income Security Act of 1974, as amended from time to
time, or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code of 1986, as amended from time to time.
3.09 Other Events. The Borrower shall promptly notify the Bank of any
material default under or violation of any material agreement, law or
regulation to which the Borrower or any Subsidiary is a party or by which it is
bound. The Borrower and its Subsidiaries shall promptly perform all of their
material obligations under any material agreements to which any of them is a
party, and each of them shall use its best efforts to ensure compliance by
other parties in all material respects with such agreements.
3.10 Compliance with Laws. The Borrower and its Subsidiaries shall
comply in all material respects at all times with all statutes, regulations,
orders and judgments to which they, or any of them, are subject.
3.11 Access. The Bank (by any of its officers, employees or agents)
shall have the right, exercisable as frequently as the Bank reasonably
determines to be appropriate, to inspect and make extracts from all of the
records, files and books of account of the Borrower or its Subsidiaries. All
reasonable costs, fees and expenses incurred by the Bank, or for which the Bank
has become obligated, in connection with any such inspection, and verification
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shall be payable by the Borrower to the Bank. Notwithstanding the foregoing
provisions of this Section, the Bank shall not exercise its right of inspection
hereunder more than once per calendar year for so long as no Event of Default
is continuing hereunder.
3.12 Deposits. The Borrower and the Included Subsidiaries shall
maintain their primary operating accounts with the Bank (except, however, that
the Borrower and its Included Subsidiaries shall be entitled to maintain
deposit accounts with other banks in market areas where the Bank does not
maintain a banking office to the extent reasonably necessary to support the
operations of the Borrower and its Subsidiaries in those market areas).
3.13 Landlord's Agreements. The Borrower and the Included Subsidiaries
shall at all times use their best efforts to obtain and maintain in effect
subordination and access agreements executed by any lessor or sublessor who
holds any interest in premises utilized by the Borrower or any Included
Subsidiary if the aggregate value of property of the Borrower and its Included
Subsidiaries located thereon exceeds $100,000 (except, however, that no such
agreement shall be required prior to December 31, 1997, for the premises
located at 191 Nassau Place Road, Yulee, Florida). The agreements shall be in
form and substance reasonably satisfactory to the Bank.
3.14 Further Assurances. If at any time counsel for the Bank is of the
reasonable opinion that any portion of the Outstanding Credit is not secured by
a first priority lien on the property described in the Security Agreement, the
Collateral Assignment and the Pledge Agreement, or as contemplated herein,
subject only to exceptions described in the Security Agreement, the Collateral
Assignment and the Pledge Agreement, and has so advised the Bank in writing,
then the Borrower shall, after written notice of such opinion from the Bank, do
all things and matters necessary to assure to the reasonable satisfaction of
counsel for the Bank that any part of the Outstanding Credit is secured or will
be secured as contemplated by this Agreement and the Security Agreement, the
Collateral Assignment and the Pledge Agreement.
ARTICLE IV
NEGATIVE COVENANTS
------------------
The Borrower and its Subsidiaries shall comply with the following
covenants during the term hereof:
4.01 Liens. Neither the Borrower nor any Subsidiary will create,
incur, assume or suffer to exist any mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of the assets of the Borrower or
any Subsidiary now or hereafter owned, or enter into or suffer to exist any
conditional sales contracts or other title retention agreements except for
Permitted Liens. For purposes hereof, Permitted Liens shall mean:
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(a) liens in favor of the Bank;
(b) existing liens described on Exhibit "C" attached hereto
(together with any replacement lien arising out of any extension,
renewal or refinancing of any such lien provided that: (i) the
indebtedness secured by each such replacement lien shall not exceed
the indebtedness secured by the lien theretofore existing; and (ii)
such replacement lien attaches only to the same property theretofore
securing the indebtedness so extended, renewed or refinanced);
(c) liens on equipment to secure indebtedness permitted hereunder
to finance the acquisition thereof;
(d) the lien of ad valorem and other taxes and assessments not
yet due and payable;
(e) liens arising out of pledges, deposits, or other amounts owed
under worker's compensation laws, unemployment insurance, old age
pensions or other social security or retirement benefits, or similar
legislation, or to secure payment of premiums for insurance purchased
in the usual course of operations or in connection with self-insurance
or to secure the performance of bids, tenders or trade contracts
incurred in the ordinary course of operations and not in connection
with the borrowing of money;
(f) deposits for indemnity bonds and other bonds required in the
ordinary course of the Borrower's or any Subsidiary's business, and
not in connection with borrowed money;
(g) inchoate materialmen's, suppliers', operators', mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's or
attorneys' liens or other like statutory liens arising in the ordinary
course of business and securing obligations (i) which are not
delinquent or (ii) the amounts or validity of which are being
contested in good faith as to which the Borrower has established
appropriate funded reserves to the extent required by generally
accepted accounting principles;
(h) deposits made by the Borrower or any Subsidiary in the
ordinary course of business;
(i) liens of financial institutions arising in the ordinary
process of collection of instruments;
(j) statutory landlord's liens, and contractual landlord's liens
created prior to this date (or in the case of any Subsidiary acquired
pursuant to a Permitted Acquisition,
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prior to the date of such acquisition) provided that amounts secured
thereby are not past due by more than 30 days; and
(k) liens securing Permitted Acquisition Debt (as defined herein)
so long as such liens do not encumber any assets of the Borrower or
any Included Subsidiary.
4.02 Obligations.
(a) Neither the Borrower nor any Subsidiary is or will become
directly or indirectly obligated in any way for any obligation for
borrowed money except for Permitted Obligations. For purposes hereof,
Permitted Obligations shall mean:
(i) any and all obligations now or hereafter owed by the
Borrower or any Subsidiary to the Bank;
(ii) indebtedness incurred solely to finance the acquisition
of equipment in the ordinary course of business so long as no
Default or Event of Default has occurred and is continuing
hereunder and so long as such indebtedness will not result in a
default in the financial covenants hereunder: (aa) at the time
such indebtedness is incurred after giving effect to such
indebtedness; and (bb) on a projected basis based upon reasonable
projections for the term of such indebtedness after giving effect
to such indebtedness;
(iii) customer deposits in the ordinary course of business;
(iv) obligations described on Exhibit "D" attached hereto;
(v) obligations subordinated to the Indebtedness pursuant to
subordination agreements reasonably acceptable to the Bank;
(vi) Permitted Acquisition Debt (as defined herein);
(vii) Obligations resulting from loans and advances
permitted under Section 4.04 hereof; and
(viii) Obligations of the Borrower or any Subsidiary in an
aggregate amount not exceeding $800,000 incurred in connection
with any governmental assistance received by the Borrower or any
such Subsidiary in connection with the construction of a
headquarters facility at the Jacksonville International Tradeport
in Jacksonville, Florida.
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(b) Neither the Borrower nor any Subsidiary shall without the
Bank's prior written consent: (i) guarantee or purchase any
obligations of any other person or entity (except pursuant to the
Guaranties and except that any such entity shall be entitled to
guarantee any Permitted Obligations of the Borrower or any other
Subsidiary); (ii) enter into any credit support, financial
maintenance, credit enhancement or similar arrangement in favor of any
person or entity; or (iii) enter into any other transaction which is
intended to assure performance of the obligations of any other person
or entity.
(c) For purposes hereof, "Permitted Acquisition Debt" shall mean
any indebtedness incurred by the Borrower or any of its Subsidiaries
to finance any Permitted Acquisition (as defined in Section 4.04
hereof) or assumed by the Borrower or any such Subsidiary in
connection with any Permitted Acquisition.
4.03 Merger; Consolidation; Sale of Substantial Assets. Neither the
Borrower nor any Subsidiary will: (a) merge into, consolidate with, or sell or
transfer all or a substantial part of its assets to, any other person or
entity; (b) sell or transfer any stock or equity interest in any Subsidiary to
any other person or entity (except for transfers to the Borrower or any other
wholly owned Included Subsidiary); (c) take any action which would reduce the
ownership or voting interest of the Borrower and its Subsidiaries in any
Subsidiary; or (d) pledge or encumber any stock of any Subsidiary (except for
pledges in favor of the Bank). Notwithstanding the foregoing: (a) each of the
Borrower and its Subsidiaries shall be entitled to sell or transfer assets to
wholly owned Included Subsidiaries; and (b) each of the Borrower's Subsidiaries
shall be entitled to merge into other corporations in order to effect Permitted
Acquisitions (as defined herein) (except, however, that if the merging
corporation is an Included Subsidiary prior tho the merger, the surviving
corporation shall also be an Included Subsidiary immediately after the
consummation of the merger).
4.04 Loans, Investments and Acquisitions.
(a) Neither the Borrower nor any Subsidiary will purchase any
stock, securities or evidence of indebtedness, or make or permit to
exist any loans or advances to, or make any investment or acquire any
interest in, any other corporation, partnership or other entity or
person (except, however, that the Borrower and its Subsidiaries shall
be entitled to make Permitted Acquisitions in accordance with the
terms hereof). Neither the Borrower nor any Subsidiary shall, without
the Bank's prior written consent, enter into partnership or joint
venture agreements with any other person or entity. Notwithstanding
the foregoing: (i) the Borrower and its Subsidiaries
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shall be entitled to extend credit and make advances to wholly owned
Included Subsidiaries; (ii) the Borrower and its Subsidiaries shall be
entitled to extend credit and make advances to Subsidiaries, other
than wholly owned Included Subsidiaries, so long as the total
outstanding amount of such credit and advances, on a combined basis,
does not exceed $250,000 at any one time; (iii) the Borrower and its
Subsidiaries may extend credit and make advances in the ordinary
course of business, in addition to credit and advances permitted under
the foregoing subparagraphs (i) and (ii), so long as the total
outstanding amount of such credit and advances, on a combined basis
under this subparagraph (iii), does not exceed $250,000 at any time;
(iv) the Borrower and its Subsidiaries may extend trade credit to
purchasers in the ordinary course of business in connection with the
sale of inventory to such purchasers; (v) the Borrower and its
Subsidiaries may invest in direct obligations of the United States
government and time certificates of deposit of banks maturing within
one year from the date of the acquisition thereof; and (vi) the
Borrower and its Subsidiaries may invest in Eligible Securities. For
purposes hereof, "Eligible Securities" shall mean: (i) government
bonds rated BBB or better by Standard & Poor's Corporation ("S&P") or
Baa2 or better by Moody's Investors Service, Inc. ("Moody's"); (ii)
commercial paper rated BBB or better by S&P or Baa2 or better by
Moody's; (iii) corporate bonds or debt rated BBB or better by S&P or
Baa2 or better by Moody's; (iv) preferred stock rated BBB or better by
S&P or Baa2 or better by Moody's; and (v) common stock of any publicly
traded corporation. Notwithstanding anything to the contrary in this
Section 4.04(a), the limitations of this Section 4.04(a) shall not be
applicable in connection with the Borrower's or any Subsidiary's
formation and funding of a newly created Subsidiary for the purposes
of consummating a Permitted Acquisition in accordance with the terms
of this Agreement.
(b) The Borrower and its Subsidiaries shall be entitled to
acquire businesses through stock acquisitions, asset purchases or
mergers upon satisfaction of the following conditions:
(i) Each such acquisition shall be made on arms length
terms. The Borrower or one of its Subsidiaries shall, after
consummation of the acquisition, own and control more than 50% of
the outstanding equity and voting rights in any corporation,
partnership or other entity acquired by the Borrower or any such
Subsidiary in connection with the acquisition.
(ii) The aggregate acquisition consideration payable by the
Borrower and its Subsidiaries for any acquisition shall not
exceed $10,000,000 (except, however, that the
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Borrower and its Subsidiaries shall be entitled to make
acquisitions for acquisition consideration in excess of such
amount with the Bank's prior written consent). The acquisition
consideration payable in connection with any such acquisition
shall mean the sum of the following items (without duplication):
(aa) all cash paid by the Borrower and its Subsidiaries in
connection with the acquisition; (bb) the fair market value of
all property transferred (including, without limitation, the fair
market value of all securities issued) by the Borrower and its
Subsidiaries in connection with the acquisition; (cc) the
principal amount of all indebtedness payable by the Borrower and
its Subsidiaries to the sellers in connection with the
acquisition; (dd) the principal amount of all obligations assumed
by the Borrower and its Subsidiaries in connection with any asset
acquisition; and (ee) all amounts paid or payable under or with
respect to covenants not to compete in connection with the
acquisition.
(iii) The acquisition will not result in a default under the
financial or other covenants hereunder: (aa) at the time such
acquisition is consummated after giving effect to such
acquisition; and (bb) on a projected basis based upon reasonable
projections after giving effect to such acquisition. In addition,
the acquisition will not result in a default or event of default
under any Guaranty, any Subsidiary Security Agreement or any
Subsidiary Collateral Assignment.
(c) For purposes of this Agreement, the term "Permitted
Acquisition" shall mean any acquisition made in accordance with the
foregoing subparagraph (b).
(d) The Borrower shall, as promptly as practicable after
consummation of any Permitted Acquisition, take all such action as may
be required to cause any Subsidiary acquired in connection therewith,
or resulting therefrom, to become an Included Subsidiary hereunder
(except to the extent that any obligations incurred or assumed in
connection with the acquisition prohibit such action).
4.05 Sale or Pledge of Property. Neither the Borrower nor any
Subsidiary will sell, lease or otherwise dispose of or transfer any of its
interests in any of its assets except in the ordinary course of business
(except for transfers permitted in Section 4.03 hereof).
4.06 Dividends and Distributions. Neither the Borrower nor any
Subsidiary which is not wholly owned by the Borrower will pay or declare any
dividends on or make any other distribution with respect to any class of its
stock whether in cash or in property.
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In addition, neither the Borrower nor any Subsidiary shall redeem, purchase or
otherwise acquire any stock or any outstanding securities of the Borrower or
any Subsidiary. Notwithstanding the foregoing: (a) the Borrower may pay a stock
dividend or declare a stock split which does not result in a reduction in the
total value of the Borrower's stockholders' equity determined immediately prior
to the stock dividend or stock split; and (b) each of the Borrower's
Subsidiaries may pay dividends and distributions to the Borrower or any
Included Subsidiary.
4.07 Pension Plan Funding Deficiency. Neither the Borrower nor any
Subsidiary shall incur or suffer to exist any material accumulated funding
deficiency within the meaning of the Employee Retirement Income Security Act of
1974 or incur any material liability to the Pension Benefit Guaranty
Corporation (or any successor) established thereunder in connection with any
Plan.
4.08 Transactions with Affiliates. The Borrower and its Subsidiaries
shall not directly or indirectly enter into any transaction with any affiliate
other than in the ordinary course and pursuant to the reasonable business
requirements of the Borrower or such Subsidiaries. Any such transaction shall
be upon fair and reasonable terms and provisions no less favorable to the
Borrower or any such Subsidiary than it could have obtained in a comparable
arm's-length transaction with a person who is not an affiliate of the Borrower
or such Subsidiary.
4.09 Financial Covenants. The Borrower and its Subsidiaries shall
comply at all times with the following financial covenants. All accounting
terms not specifically defined herein shall be construed in accordance with
generally accepted accounting principles as in effect at the time in question
on a basis consistently applied. All financial covenants set forth herein shall
be calculated on a consolidated basis for the Borrower and its Subsidiaries.
(a) The Borrower's Capitalization Ratio shall not at any time
exceed: (i) .50 to 1 commencing on March 26, 1997, and continuing
through December 26, 1997; (ii) .41 to 1 commencing on December 27,
1997, and continuing through December 25, 1998; and (iii) .33 to 1
from and after December 26, 1998. The Borrower's Capitalization Ratio
shall mean: (i) the Borrower's Funded Debt; divided by (ii) the sum of
the Borrower's Funded Debt plus its Total Equity. For purposes hereof,
the following terms shall have the following meanings:
(i) "Funded Debt" shall mean: (aa) all obligations of the
Borrower to the Bank under the Loan Documents; plus (bb) all
other indebtedness of the Borrower or any Subsidiary for borrowed
money other than Short Term Indebtedness. "Short Term
Indebtedness" shall mean all indebtedness for borrowed money
(other than the
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Indebtedness) that matures not more than one year from the date
of incurrence thereof and that is not extendible or renewable at
the sole option of the obligor for a period in excess of one
year. Notwithstanding the foregoing, Short Term Indebtedness
shall not in any event include: (aa) indebtedness for borrowed
money for which the Borrower or any Subsidiary may become liable
as a result of any Permitted Acquisition (including, without
limitation, any indebtedness of the acquired entity for which the
Borrower or any Subsidiary may become liable); or (bb)
indebtedness (including, without limitation, seller financing)
incurred to finance Permitted Acquisitions.
(ii) "Total Equity" shall mean the Borrower's consolidated
stockholders equity determined in accordance with generally
accepted accounting principles as in effect at the time in
question on a basis consistently applied. "Total Equity" shall
not include the value of any stock issued by the Borrower in
connection with any Permitted Acquisition with respect to which
the Borrower or any Subsidiary has provided price guarantees or
similar value assurances.
(b) The Borrower's Debt Ratio shall be calculated as of the first
day of each fiscal quarter of the Borrower and shall not exceed 3.0 to
1 as of any such date. The Debt Ratio shall mean: (i) the Borrower's
Funded Debt as of each calculation date; divided by (ii) the
Borrower's Adjusted Earnings as of such date. For purposes hereof, the
Borrower's Adjusted Earnings shall mean:
(i) For all calculations made on or before December 28,
1997: (aa) the Borrower's and all Subsidiaries' earnings before
interest, taxes, depreciation and amortization (including,
without limitation, any income tax credits utilized) (less the
amount or value of any contingent payments made by the Borrower
or any Subsidiary in connection with any acquisition) on a
consolidated basis for the immediately preceding fiscal quarter;
multiplied by (bb) four.
(ii) For all calculations made after December 28, 1997, the
Borrower's and all Subsidiaries' earnings before interest, taxes,
depreciation and amortization (including, without limitation, any
income tax credits utilized) (less the amount or value of any
contingent payments made by the Borrower or any Subsidiary in
connection with any acquisition) on a consolidated basis for the
four preceding fiscal quarters.
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(c) The Borrower's Interest Coverage Ratio shall be the ratio of:
(i) the Borrower's and all Subsidiaries' earnings before interest,
taxes, depreciation and amortization (including, without limitation,
any income tax credits utilized) (less the amount or value of any
contingent payments made by the Borrower or any Subsidiary in
connection with any acquisition) on a consolidated basis for the four
preceding fiscal quarters to (ii) the sum of all interest payable by
the Borrower or any such subsidiary during such fiscal quarters. The
Interest Coverage Ratio shall be computed on the first day of each
fiscal quarter of the Borrower, so long as the Indebtedness to the
Bank is outstanding and shall not be less than 3.0 to 1.
(d) The ratio of the Borrower's consolidated current assets to
consolidated current liabilities shall at no time be less than 2.0 to
1. "Current assets" shall mean the aggregate amount of all assets of
an entity that may properly be classified as current assets in
accordance with generally accepted accounting principles, not
including, however, (i) any deferred assets, (ii) common stock of any
publicly traded corporation if the Borrower and its Subsidiaries own
in the aggregate more than 5% of such corporation's issued and
outstanding shares of common stock, and (iii) any amounts owed to such
entity by officers, directors, employees, stockholders or subsidiaries
or other affiliates of such entity. "Current liabilities" shall mean
all indebtedness of an entity payable on demand or within a period of
one year from the date of the creation thereof (excluding any
indebtedness renewable or extendible at the option of the debtor,
absolutely or conditionally, for a period or periods extending to more
than one year after such date, whether or not actually so renewed or
extended) plus current maturities of long term debt.
(e) The Borrower and the Subsidiaries shall not allow the ratio
of Total Liabilities to Total Equity for the Borrower and its
Subsidiaries to exceed 1.2 to 1. For purposes of this Agreement,
"Total Liabilities" shall mean: (i) any indebtedness or liability for
borrowed money and any other indebtedness or liability evidenced by
notes, debentures, bonds or similar obligations; and (ii) all other
obligations which under generally accepted accounting principles are
shown or should be shown on the balance sheet as liabilities.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants, and so long as this Agreement is
in effect or any part of the Indebtedness remains unpaid, shall continue to
represent and warrant at all times, that:
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5.01 The Borrower and Subsidiaries. The Borrower and the Subsidiaries
are corporations duly incorporated and validly existing under and by virtue of
their respective states of incorporation. Each is duly licensed and qualified
in all other states and jurisdictions wherein the nature of the business
transacted by it or the ownership of its properties makes such licensing or
qualification as a foreign corporation necessary, if any except where the
failure to be so qualified would not have a material adverse effect on the
Borrower and its Subsidiaries taken as a whole. Each of the Borrower and its
Subsidiaries holds in full force and effect all material permits, licenses and
franchises necessary for it to carry out its operations in conformity with all
applicable laws and regulations.
5.02 Authorization, Conflicts and Validity. The execution and delivery
of this Agreement and each of the other Loan Documents to which the Borrower is
or will be a party and the performance by the Borrower of all of its
obligations thereunder: (a) have been duly authorized by all requisite
corporate action; (b) will not violate or be in conflict with (i) any material
provision of applicable law (including, without limitation, any applicable
usury or similar law); (ii) any material order, rule or regulation of any court
or other governmental authority; (iii) any material provision of its
certificate of incorporation or bylaws, including any amendments thereto, or
any resolution with continuing effect adopted by its Board of Directors or
shareholders; or (iv) any material provision of any shareholders' agreement or
trust respecting securities of its issue or related rights; (c) will not
violate, be in conflict with, result in a breach of or constitute a default
(with or without the giving of notice or the passage of time or both) under any
material instrument, indenture, agreement or other obligation to which it is a
party or by which it or any of its assets and properties is or may be bound or
subject; and (d) except as specifically contemplated by this Agreement or any
other Loan Documents, will not result in the creation or imposition of any
lien, charge or encumbrance of any nature upon any of its assets and
properties. The Loan Documents to which the Borrower is or will be a party when
executed and delivered will be legal, valid and binding obligations of the
Borrower, enforceable in accordance with their respective terms and provisions.
5.03 Consents. Except as otherwise disclosed on Schedule 5.03 attached
hereto, no consent, approval or authorization of, or registration, declaration
or filing with, any governmental authority or other person (including, without
limitation, the shareholders of the Borrower) is required as a condition
precedent, concurrent or subsequent to or in connection with the due and valid
execution, delivery and performance by the Borrower of this Agreement or any
other Loan Document to which it is or will be a party, or the legality,
validity, binding effect or enforceability of any of the respective
representations, warranties, covenants and other terms and provisions thereof.
Each franchise, license,
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certificate, authorization, approval or consent from any governmental authority
material to the present conduct of the business and operations of the Borrower
or its Subsidiaries, or required for the acquisition, ownership, improvement,
operation or maintenance by it of any material portion of the assets and
properties it now owns, operates or maintains, has been obtained and validly
granted, is in full force and effect and constitutes valid and sufficient
authorization therefor.
5.04 Financial Statements. The Borrower has heretofore made available
to the Bank financial statements as of and for the fiscal year ending December
28, 1996. Those financial statements fairly present the financial condition of
the Borrower and the Subsidiaries taken as a whole and the results of their
operations as of the dates thereof. Those financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except for changes, if
any, stated in the related accountants' reports.
5.05 Changes in Financial Condition. Since December 28, 1996, there
has been no material adverse change in the assets or the financial condition of
the Borrower or its Subsidiaries taken as a whole from that set forth or
reflected in the financial statements as of that date. The Borrower and its
Subsidiaries are current in the payment of all of their debts and performance
of all of their material obligations.
5.06 Legal or Administrative Proceedings. Except as otherwise
disclosed on Schedule 5.06 attached hereto, there are no material actions,
suits, investigations or proceedings by any person or entity pending or to the
best knowledge of the Borrower threatened against the Borrower or any
Subsidiary or to which they are a party involving the possibility of any
judgment or liability not fully covered by insurance or by adequate reserves
set up on the books of the Borrower or the Subsidiaries.
5.07 Assets. Except as otherwise disclosed on Schedule 5.07 attached
hereto, the Borrower and the Subsidiaries have good, marketable title to all of
their assets reflected in the financial statements dated December 28, 1996, and
such assets are free and clear of all liens, charges and encumbrances except as
shown on those financial statements.
5.08 Losses. Since December 28, 1996, no material loss, damage,
destruction or taking of any of the physical properties of the Borrower or any
of its Subsidiaries has occurred which has not been fully restored or replaced,
or which is not fully covered by insurance, and neither the property nor
business of the Borrower and its Subsidiaries, taken as a whole, has been
adversely affected in any substantial way as the result of any accident,
strike, lockout, combination of workmen, embargo, riot, war, act of God or
20
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public enemy. Neither the Borrower, any Subsidiary nor any of their officers
are aware of any material adverse fact concerning the conditions or future
prospects of the Borrower or any Subsidiary which has not been fully disclosed
in writing to the Bank.
5.09 Corporate Restrictions. Except as otherwise disclosed on Schedule
5.09 attached hereto, neither the Borrower nor any Subsidiary is a party to any
contract or subject to any charter or other corporate restriction which would
materially and adversely affect its property or business, or its ability to
perform its obligations under the Loan Documents.
5.10 Taxes. The Borrower and the Subsidiaries have filed all federal
and state tax returns which are required to be filed, and have paid all taxes
as shown on the returns and on all assessments received by them to the extent
that the taxes have become due. Proper and accurate amounts have been withheld
by the Borrower and its Subsidiaries from their respective employees for all
periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
governmental agencies.
5.11 Default. There exists as of the date hereof no Default or Event
of Default.
5.12 Other Representations. All warranties and representations of
the Borrower or any of the Subsidiaries contained in any of the Loan Documents
are true and accurate in all material respects.
5.13 Subsidiaries. As of the date hereof, the Borrower owns no
Subsidiaries other than NIK, DTC, Armor Holdings Properties, Inc. and Armor
Holdings Limited. The Borrower owns 100% of the outstanding common stock of its
Subsidiaries. The only persons or entities in which the Borrower owns an equity
interest are the Subsidiaries. No person or entity holds or is entitled to
obtain any other equity interest in the Subsidiaries.
5.14 ERISA. No Plan has incurred any material accumulated funding
deficiency within the meaning of the Employee Retirement Income Security Act of
1974, and neither the Borrower nor any Subsidiary has incurred any material
liability to the Pension Benefit Guaranty Corporation (or any successor) in
connection with any Plan.
5.15 Purpose of the Borrower. The Borrower does not own any "margin
security" within the meaning of Regulation U (12 CFR Part 221) of the Board of
Governors of the Federal Reserve System. None of the proceeds of the loan by
the Bank to the Borrower will be used for the purpose of purchasing or carrying
any margin security
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or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry a margin security or for any other
purpose which might constitute this transaction a "purpose credit" within the
meaning of Regulation U, as now in effect or as it may hereafter be amended.
Neither the Borrower nor any agent acting on its behalf has taken or will take
any action which might cause this Agreement or any Loan Document to violate
Regulation U or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Securities Exchange Act of 1934, in each case
as in effect now or as the same may hereafter be amended.
5.16 Payment of Loan Proceeds. The Bank is authorized to disburse all
proceeds of any loan to the Borrower hereunder directly to or upon the order of
the president, vice president--finance, vice president--corporate development
or controller of the Borrower without looking into the use of those proceeds.
The president of the Borrower as of the date hereof is Jonathan Spiller, the
vice president--finance of the Borrower as of the date hereof is Carol Burke,
the vice president--corporate development of the Borrower as of the date hereof
is Robert Schiller and the controller of the Borrower as of the date hereof is
Scott Vining. The Bank may rely on the fact that each continues to serve in
that capacity until the Bank receives written notice to the contrary.
5.17 Solvency. After giving effect to the full funding of the loans
contemplated herein, the Borrower and each Subsidiary will be solvent.
"Solvent" shall mean, when used with respect to any person or entity, that: (a)
such person or entity does not intend to incur, and does not believe and has no
reason to believe that it will incur, debts beyond its ability to pay as they
become due; (b) the sum of such person's or entity's assets is greater than all
of such person's or entity's liabilities at a fair valuation; (c) such person
or entity has sufficient cash flow to enable it to pay its debts as they become
due; and (d) such person or entity does not have unreasonably small capital to
carry on such person or entity's business as theretofore operated and all
businesses in which such person or entity is about to engage. "Fair valuation"
is intended to mean that value which can be obtained if the assets are sold
within a reasonable time in arm's-length transactions in an existing and not
theoretical market.
5.18 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
ARTICLE VI
EVENTS OF DEFAULT
-----------------
6.01 Events of Default. Each of the following events shall constitute
an "Event of Default" hereunder:
22
<PAGE>
(a) if the Borrower defaults in the payment of any principal,
interest or other amount under the Note, the Acceptance Agreement or
any Reimbursement Agreement when the same shall become due, either by
the terms thereof or otherwise as provided herein and such default
continues for a period of ten days thereafter; or
(b) if the Borrower or any Subsidiary defaults: (i) in any
payment of principal of or interest on any other obligation beyond
any period of grace provided with respect thereto and such default
results in the acceleration of the obligation in question or (ii) in
the performance or observance of any other agreement, term, or
condition contained in any agreement under which any such obligation
is created if the effect of such default is to cause, or permit the
holder or holders of such obligation (or trustee on behalf of such
holder or holders) to cause, such obligation to become due prior to
its stated maturity, except for obligations disputed in good faith if
the Bank is promptly notified thereof and, if required by generally
accepted accounting principles, funded reserves are established or
(c) if any statement, representation or warranty made by the
Borrower or any Subsidiary herein or in any writing now or hereafter
furnished in connection with or pursuant to the Loan Documents or in
connection with any audit shall be false in any material respect; or
if the Borrower or any Subsidiary omits or fails to disclose within 10
days any substantial contingent or liquidated liabilities, or any
material adverse change in facts previously disclosed by any
statement, representation, certificate or warranty to the Bank; or
(d) if the Borrower or any Subsidiary defaults in the performance
or observance of any covenants contained in Section 4.09 hereof; or
(e) (i) if any Event of Default occurs under any Loan Document;
or (ii) if the Borrower or any Subsidiary defaults in the performance
or observance of any other agreement, covenant, term or condition
contained herein or in any other Loan Document and such default shall
not have been remedied within 30 days after written notice thereof is
sent by the Bank to the Borrower except, however, that an Event of
Default shall not be deemed to have occurred if the Borrower or the
Subsidiary, as the case may be, commences to cure such default within
such 30-day period and the Borrower or such Subsidiary, as the case
may be, completes such cure within 60 days after such notice; or
(f) if any Included Subsidiary disputes, attempts to avoid or
indicates its intent to seek to avoid its obligations under any
Guaranty; or
23
<PAGE>
(g) if the Borrower or any Subsidiary makes an assignment for the
benefit of creditors or is generally not paying its debts as they
become due; or
(h) if any order, judgment or decree is entered under the
bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction adjudicating the Borrower or any Subsidiary, bankrupt or
insolvent; or
(i) if the Borrower or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of a trustee, receiver,
custodian, liquidator, or similar official, of the Borrower or any
Subsidiary or of any substantial part of the assets of the Borrower or
any Subsidiary, or commences a voluntary case under the Bankruptcy
Code of the United States or any proceedings relating to the Borrower
or any Subsidiary, under the bankruptcy, insolvency, or moratorium law
of any other jurisdiction, whether now or hereafter in effect; or
(j) if any such petition or application is filed, or any such
proceedings are commenced, against the Borrower or any Subsidiary and
if the Borrower or the Subsidiary by any act indicates its or his
approval thereof, consent thereto, or acquiescence therein, or an
order is entered in an involuntary case under the Bankruptcy Code of
the United States, or an order, judgment or decree is entered
appointing any such trustee, receiver, custodian, liquidator, or
similar official, or approving the petition in any proceedings, and
such order remains unstayed and in effect for more than 60 days; or
(k) if any order is entered in any proceedings against the
Borrower or any Subsidiary decreeing the dissolution or split-up of
the Borrower or any Subsidiary.
6.02 Default. A "Default" shall be deemed to have occurred hereunder
if any event or condition occurs which would constitute an Event of Default
hereunder upon the satisfaction of any requirement for notice or passage of
time in connection with such event or condition.
6.03 Remedies. If any Default shall occur, any obligation of the Bank
to make advances hereunder or under any Loan Document, or to create
Acceptances, shall be terminated without notice to the Borrower. In addition,
if any Event of Default shall occur, the Bank may by notice to the Borrower,
effective upon dispatch, declare the entire unpaid principal amount then
outstanding under the Loan Documents, all interest accrued and unpaid under the
Loan Documents and all other Indebtedness of the Borrower to the Bank under
this Agreement or any of the other Loan Documents to be forthwith due and
payable. Thereupon, the then outstanding
24
<PAGE>
principal amount under the Loan Documents, all such accrued interest and all
such other Indebtedness shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower, and the Bank may immediately enforce
payment of all such amounts and exercise any or all of the rights and remedies
of the Bank under this Agreement and other Loan Documents, including without
limitation the right to resort to any or all collateral securing any
obligations under the Loan Documents and exercise any or all of the rights of a
secured party pursuant to the Uniform Commercial Code of Florida and other
applicable similar statutes in other jurisdictions.
6.04 Termination of Rights to Advances; Automatic Acceleration.
Notwithstanding anything herein to the contrary, (a) the Borrower's right, if
any, to obtain any additional advances under the Loan Documents shall
automatically terminate upon the initiation against the Borrower or any
Subsidiary of any proceeding under the Federal Bankruptcy Code, or upon the
occurrence of any Event of Default described in subparagraphs (g), (h), (i),
(j), or (k) of Section 6.01, and (b) all Indebtedness shall automatically be
and become immediately due and payable upon the occurrence of any Event of
Default described in subparagraphs (h), (i), or (j) of Section 6.01.
ARTICLE VII
MISCELLANEOUS
-------------
7.01 Expenses. The Borrower agrees to pay, and save the Bank harmless
against liability for the payment of, all reasonable out-of-pocket expenses
arising in connection with this transaction (including any renewals or
modifications relating hereto), including any state documentary stamp taxes or
other taxes (including interest and penalties, if any) which may be determined
to be payable in respect to the execution and delivery of any Loan Documents
executed in connection with this Agreement or any such renewal or modification,
and the reasonable fees and expenses of the Bank's counsel. The Borrower
acknowledges that it has participated with the Bank in establishing the
structure of this transaction and that it has independently determined the
amount of documentary stamp and other taxes due in connection herewith. The
Borrower has not relied upon representations of the Bank or its counsel in
calculating the amount of such taxes, and the Borrower shall be liable for any
additional taxes (including interest and penalties) which may be due in
connection with this transaction or any renewals hereof. If an Event of Default
shall occur, the Borrower shall also pay all of the Bank's costs of collection
including reasonable Bank employee travel expenses, court costs and reasonable
fees of attorneys and legal assistants (whether incurred in connection with
trial or appellate proceedings). The Borrower authorizes the Bank to make
advances under the Note and to debit its deposit accounts to pay all expenses.
25
<PAGE>
7.02 Survival of Representations and Warranties. All representations
and warranties contained herein or made in writing by the Borrower in
connection herewith shall survive the execution and delivery of the Loan
Documents.
7.03 Successors and Assigns. All covenants and agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not. The Borrower shall not be entitled to
assign its rights hereunder. The Bank may, with the Borrower's consent, which
shall not be unreasonably withheld or delayed, assign all or part of its rights
hereunder or grant participations herein. The Bank may disclose to any such
assignee or participant (or any prospective assignee or participant) such
information concerning the Borrower and its affiliates as the Bank deems
appropriate.
7.04 No Third Party Beneficiaries. The Included Subsidiaries are not
third party beneficiaries to this Loan Agreement and, in addition to the rights
of the Bank set forth in the Guaranties, the Bank, with the concurrence of the
Borrower, shall have the right without impairing the liability of the Included
Subsidiaries to alter and amend this Loan Agreement without notice to or
consent by the Included Subsidiaries.
7.05 Notices. All communications, notices or demands provided for
hereunder or under any other Loan Document to which the Borrower is a party
shall be sent by first class mail, by courier, by hand or by certified mail as
follows or to such other address with respect to any party as such party shall
notify the others in writing:
To the Bank: Barnett Bank, N.A.
50 North Laura Street
Jacksonville, Florida 32202
Attn: Corporate Banking Group
To the Borrower: Armor Holdings, Inc.
191 Nassau Place Road
Yulee, Florida 32097
Attn: Robert Schiller
With a copy to:
Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attn: Robert L. Lawrence, Esq.
Each such communication, notice or demand shall be deemed given:
(i) when deposited in the mail with proper postage affixed if sent
26
<PAGE>
by mail; or (ii) when actually delivered to the appropriate address if sent by
courier or by hand.
7.06 Applicable Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida.
7.07 Headings. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.
7.08 Counterparts. This Agreement may be executed simultaneously in
several counterparts. Each counterpart shall be deemed an original.
7.09 Remedies Cumulative. All rights and remedies of the Bank
hereunder are cumulative and in addition to any rights and remedies which the
Bank may have under the laws of Florida. The Bank's exercise of any one right
or remedy against one party hereto will not deprive the Bank of any right or
remedy against that party or any other parties hereto. No right, power or
remedy conferred upon or reserved to the Bank under this Agreement or any other
of the Loan Documents is exclusive of any other right, power or remedy in any
of the Loan Documents, but each and every such right, power and remedy shall be
cumulative and concurrent and shall be in addition to any other right, power
and remedy given hereunder or under any other Loan Documents, or now or
hereafter existing at law, in equity or by statute.
7.10 Delay or Omission. No delay or omission of the Bank to exercise
any right, power or remedy under any of the Loan Documents or accruing upon any
Event of Default shall exhaust or impair any such right, power or remedy or
shall be construed to waive any such Event of Default or to constitute
acquiescence therein. Every right, power and remedy given to the Bank under any
of the Loan Documents may be exercised from time to time and as often as may be
deemed expedient by the Bank.
7.11 No Waiver of One Default to Affect Another. No waiver of any
Default or Event of Default hereunder shall extend to or affect any subsequent
Default or Event of Default or any other Default or Event of Default then
existing, or impair any rights, powers or remedies consequent thereon.
7.12 Changes. No term of any Loan Document may be changed, waived,
discharged or terminated orally, or by any action or inaction, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
7.13 Severability. If any portion of any Loan Document is declared
void by any court as illegal or against public policy, the
27
<PAGE>
remainder of the Loan Documents in question shall continue in full effect.
7.14 Lost or Damaged Note. Upon receipt by the Borrower of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
the Note (the "Lost Note") and of an indemnity agreement reasonably
satisfactory to the Borrower, the Borrower will make and deliver to the Bank a
new Note of like tenor, date and principal amount in lieu of the Lost Note.
7.15 Merger. This Agreement supersedes and replaces any commitment
letter relating to the Indebtedness.
7.16 Capitalized Terms. Capitalized terms that are not otherwise
defined herein shall have the meanings set forth in the introductory paragraph
or the Recitals, as the case may be, to this Amended and Restated Loan
Agreement.
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement on the day and year first above written.
ARMOR HOLDINGS, INC.
By /s/ Carol T. Burke
--------------------------------
Its Vice President - Finance
----------------------------
BARNETT BANK, N.A.
By /s/ Sharon W. Bowens
---------------------------------
Its Loan Closing Officer
-----------------------------
28
<PAGE>
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 26th day of March, 1997, by Carol T. Burke, the Vice President
of Finance of Armor Holdings, Inc., on behalf of the corporation, in Camden
County, Georgia.
/s/ V. Thomas Fountain
-----------------------------------
Notary Public, State and County
Aforesaid
My Commission Expires: Jan 16, 2000
(Notary Seal)
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 26th day of March, 1997, by Sharon W. Bowens, the Loan Closing
Officer of Barnett Bank, N.A., on behalf of the bank, in Camden County,
Georgia.
/s/ V. Thomas Fountain
-----------------------------------
Notary Public, State and County
Aforesaid
My Commission Expires: Jan 16, 2000
(Notary Seal)
29
<PAGE>
Exhibit 10.5
RENEWAL PROMISSORY NOTE
-----------------------
$20,000,000.00 March 26, 1997
Camden County, Georgia
FOR VALUE RECEIVED, the undersigned, ARMOR HOLDINGS, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of BARNETT
BANK, N.A. (the "Lender"), whose address is 50 North Laura Street,
Jacksonville, Florida 32202, the outstanding principal balance of this Note,
together with accrued interest hereunder, in accordance with the terms set
forth herein. This Note shall be governed by the following provisions:
1. Advances.
(a) The Borrower and the Lender are parties to an Amended and
Restated Loan Agreement (as amended or restated from time to time, the "Loan
Agreement") of even date herewith governing borrowings under this Note. The
Borrower may borrow, repay and reborrow principal amounts hereunder on a
revolving basis during the Revolving Period (as defined herein) subject to the
terms contained herein and in the Loan Agreement. Notwithstanding the
foregoing, the outstanding principal balance hereof shall not exceed
$20,000,000.00 (or such lesser amount as is set forth in the Loan Agreement) at
any one time. The Borrower shall not be entitled to obtain any further advances
hereunder from and after the expiration of the Revolving Period.
(b) For purposes hereof, the following terms shall have the
following meanings:
(i) "Revolving Expiration Date" shall initially mean March 1,
1999. During the 30 day period commencing on each March 31 during
the Revolving Period (commencing with the 30 day period beginning
on March 31, 1998), the Borrower may by written notice to the
Lender request that the Lender extend the Revolving Expiration Date
then in effect for an additional twelve months. The Lender may, in
its sole discretion, thereupon elect to extend the Revolving
Expiration Date by an additional twelve months. Any such election
by the Lender shall be evidenced only by written notice to the
Borrower executed by the Lender. Any failure by the Lender to
deliver such written notice within 60 days after the Borrower has
made a request for extension hereunder shall be deemed a rejection
of such request. If the Lender delivers a written notice consenting
to an extension of the Revolving Expiration Date, then the term
"Revolving Expiration Date" shall
- -------------------------------------------------------------------------------
THIS NOTE RENEWS AND MODIFIES THAT CERTAIN PROMISSORY NOTE DATED NOVEMBER 14,
1996, EXECUTED BY THE BORROWER IN FAVOR OF THE LENDER IN THE ORIGINAL PRINCIPAL
AMOUNT OF $10,000,000.00.
<PAGE>
thereafter mean the date to which the Lender has extended the
Revolving Expiration Date pursuant to such notice. The Lender shall
have no obligation to extend the Revolving Expiration Date, and the
Lender may at any time elect not to extend the Revolving Expiration
Date (whether or not an Event of Default has occurred hereunder).
The Borrower shall not be entitled to request more than one
extension hereunder per year.
(ii) "Revolving Period" shall mean a period commencing on the
date hereof and ending on the Revolving Expiration Date.
(iii) "Term Period" shall mean a three year period commencing
on the first day after the expiration of the Revolving Period.
2. Payments.
(a) The Borrower shall pay all accrued interest hereunder on the
first day of each calendar month during the term hereof commencing on April 1,
1997, and continuing on the first day of each calendar month thereafter.
(b) The Borrower shall repay principal hereunder in monthly
installments on the first day of each calendar month during the Term Period.
Each principal installment shall equal 1/36th of the outstanding principal
balance of this Note as of the commencement of the Term Period.
(c) The Borrower shall pay all remaining outstanding principal
hereunder, together with all then accrued and unpaid interest, on the last day
of the Term Period.
3. Interest.
(a) Except as otherwise provided herein, interest shall accrue on
the outstanding principal balance of this Note at a rate equal to the Prime
Rate less one-quarter of one percent (0.25%) per annum. The Prime Rate shall be
the interest rate announced from time to time by Barnett Banks, Inc. as its
prime rate. The Prime Rate is a reference rate and is not necessarily the
lowest or best rate the Lender may from time to time charge its customers. For
purposes of this Note, any change in the Prime Rate shall be effective as of
the Lender's opening of business on the effective date of the change.
(b) Notwithstanding the foregoing, the Borrower may elect to pay
interest on all or a portion of the outstanding principal hereunder for periods
of 30, 60 or 90 days (each, an "Interest Period") at an Adjusted Libor Rate (as
defined herein). The Borrower may make such election by delivering written
notice
2
<PAGE>
thereof to the Lender at least two business days before the commencement of the
Interest Period. The notice shall state: (i) the date upon which the Interest
Period shall commence (which shall not be a Saturday, Sunday or legal holiday);
(ii) whether such Interest Period shall be for 30, 60 or 90 days; and (iii) the
aggregate principal amount which shall bear interest at the Adjusted Libor Rate
(which amount is referred to herein as the "Libor Amount"). If the Borrower
duly elects for interest to accrue hereunder at the Adjusted Libor Rate, then
interest shall accrue at the Adjusted Libor Rate on the applicable Libor Amount
during the applicable Interest Period. Any election hereunder shall be
irrevocable during the term of the Interest Period, and no Interest Period
elected hereunder shall extend beyond the expiration of the Term Period. The
Borrower shall not be entitled to have more than ten interest rates in effect
at any one time during the term of this Note. Each Libor Amount shall be in an
increment of $50,000, and no Libor Amount shall be less than $250,000. The
Adjusted Libor Rate shall be a daily rate that is two and one-quarter percent
(2.25%) per annum over the Libor Rate (as defined herein). The Libor Rate for
each Interest Period shall mean the offered rate for deposits in United States
dollars in the London Interbank market for period equal to the applicable
Interest Period which appears on the Reuters Screen LIBO Page as of 11:00 a.m.
(London time) on the day that is two London Banking Days (as defined herein)
preceding the first Banking Business Day (as defined herein) of the Interest
Period. If at least two such offered rates appear on the Reuters Screen LIBO
Page, the rate will be the arithmetic mean of such offered rates. The Lender
may, in its discretion, use any other publicly available index or reference
rate showing rates offered for United States dollar deposits in the London
Interbank market as of the applicable date. In addition, the Lender may, in its
discretion, use rate quotations for monthly periods in lieu of quotations for
substantially equivalent daily periods. For purposes hereof, the following
terms shall have the following meanings:
(i) "Banking Business Day" shall mean each day other than a
Saturday, a Sunday or any holiday on which commercial banks in
Jacksonville, Florida are closed for business.
(ii) "London Banking Day" shall mean each day other than a
Saturday, a Sunday or any holiday on which commercial banks in London,
England are closed for business.
(c) All interest hereunder shall be calculated on the basis of a
360-day year (based upon the actual number of days elapsed).
(d) The total liability of the Borrower and any endorsers or
guarantors hereof for payment of interest shall not exceed any limitations
imposed on the payment of interest by
3
<PAGE>
applicable usury laws. If any interest is received or charged by any holder
hereof in excess of that amount, the Borrower shall be entitled to an immediate
refund of the excess.
(e) Upon the occurrence of an Event of Default hereunder, interest
shall accrue at the Default Rate hereinafter set forth notwithstanding the
provisions of this Section.
4. Prepayment. The Borrower shall be entitled to prepay this Note in
whole or in part at any time without penalty. Notwithstanding the foregoing and
any other contrary provision set forth herein or in the Loan Agreement: (a) the
Borrower shall not be permitted to prepay any Libor Amount prior to the
expiration of any applicable Interest Period; and (b) any such Libor Amounts
shall not be repaid or reborrowed on a revolving basis during any applicable
Interest Period. All prepayments of principal during the Term Period shall be
applied to principal installments in the inverse order of maturity.
5. Application of Payments. All payments hereunder shall be applied
first to the Lender's costs and expenses, then to fees authorized hereunder or
under the Loan Agreement, then to interest and then to principal.
6. Default. Any Event of Default under the Loan Agreement shall be
considered an "Event of Default" hereunder. If any Default (as defined in the
Loan Agreement) or any Event of Default shall occur, the Lender may, without
notice to the Borrower, refuse to advance any more funds hereunder or under the
Loan Agreement. In addition, if any Event of Default shall occur, the Lender
may, in the manner set forth in the Loan Agreement, declare the outstanding
principal of this Note, all interest thereon and all other amounts payable
under this Note or otherwise to be forthwith due and payable. Thereupon, this
Note, all such interest and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower. From and after
the occurrence of an Event of Default, all outstanding principal hereunder, and
accrued and unpaid interest and other charges hereunder, shall bear interest at
the rate of either two percent (2%) per annum above the Prime Rate until paid
or, if such rate is usurious under the laws of Florida, then at the highest
legal rate permissible thereunder (the "Default Rate").
7. Expenses. All parties liable for the payment of this Note agree to
pay the Lender all reasonable costs incurred by it in connection with the
collection of this Note. Such costs include, without limitation, reasonable
fees for the services of counsel and legal assistants employed to collect this
Note, whether or not suit be brought, and whether incurred in connection with
collection, trial, appeal or otherwise. All such parties further agree to
indemnify and hold the Lender harmless against liability for the
4
<PAGE>
payment of state documentary stamp taxes, intangible taxes or other taxes
(including interest and penalties, if any), excluding income or service taxes
of the Lender, which may be determined to be payable with respect to this
transaction.
8. Substitute Rate. Anything herein to the contrary notwithstanding,
if within two business days prior to the first day of any Interest Period
during which interest will accrue at the Adjusted Libor Rate the Lender is not,
for any reason whatsoever, able to obtain rates to enable it to determine the
Adjusted Libor Rate, the Lender shall give the Borrower prompt notice thereof.
The Note shall thereafter accrue interest at the rate set forth in Subsection
3(a) hereof.
9. Change of Law. Notwithstanding any other provision herein, if any
applicable law, rule or regulation or the interpretation or administration
thereof makes it unlawful for the Lender to (i) honor any commitment it may
have hereunder to accrue interest at the Adjusted Libor Rate, then such
commitment shall terminate, or (ii) maintain any accrual of interest at the
Adjusted Libor Rate, then interest shall immediately upon notice from the
Lender accrue at the rate set forth in Subsection 3(a) hereof.
10. Miscellaneous. The Borrower shall make all payments hereunder in
lawful money of the United States at the Lender's address set forth herein or
at such other place as the Lender may designate in writing. The remedies of the
Lender as provided herein shall be cumulative and concurrent, and may be
pursued singly, successively or together, at the sole discretion of the Lender
and may be exercised as often as occasion therefor shall arise. No act of
omission or commission of the Lender, including specifically any failure to
exercise any right, remedy or recourse, shall be effective, unless set forth in
a written document executed by the Lender, and then only to the extent
specifically recited therein. A waiver or release with reference to one event
shall not be construed as continuing, as a bar to, or as a waiver or release of
any subsequent right, remedy or recourse as to any subsequent event. This Note
shall be construed and enforced in accordance with Florida law and shall be
binding on the successors and assigns of the parties hereto. The term "Lender"
as used herein shall mean any holder of this Note. The Lender may, at its
option, round any or all fractional amounts under Section 3 upwards to the next
higher 1/100 of 1%.
The Borrower hereby: (i) waives demand, notice of demand,
presentment for payment, notice of nonpayment or dishonor, protest, notice of
protest and all other notice, filing of suit and diligence in collecting this
Note; (ii) agrees to any substitution, addition or release of any party or
person primarily or secondarily liable hereon; and (iii) agrees that the Lender
shall not be required first to institute any suit, or to exhaust his, their or
its remedies against the Borrower or any other person or party to
5
<PAGE>
become liable hereunder, or against any collateral in order to enforce payment
of this Note.
ARMOR HOLDINGS, INC.
By /s/ Carol T. Burke
---------------------------------
Its Vice President - Finance
-----------------------------
(CORPORATE SEAL)
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 26th day of March, 1997, by Carol T. Burke the Vice President of
Finance of Armor Holdings, Inc., on behalf of the corporation, in Camden
County, Georgia.
/s/ V. Thomas Fountain
-----------------------------------
Notary Public, State and County
aforesaid
Print Name: V. Thomas Fountain
------------------------
Notary Public, Camden
County, Georgia
My Commission Exp.
Jan. 16, 2000
My Commission Expires:
[Notary Seal]
6
<PAGE>
Exhibit 10.6
AMENDED AND RESTATED SECURITY AGREEMENT
---------------------------------------
THIS AGREEMENT is made this 26th day of March, 1997, by ARMOR
HOLDINGS, INC., a Delaware corporation (the "Debtor"), whose address is 191
Nassau Place Road, Yulee, Florida 32097, and BARNETT BANK, N.A. (the "Secured
Party"), whose address is 50 N. Laura Street, Jacksonville, Florida 32202.
For good and valuable consideration, the Debtor agrees as follows:
1. Security Interest. In consideration of and as an inducement for the
Secured Party's extending or continuing to extend credit to the Debtor, the
Debtor hereby gives the Secured Party a continuing and unconditional security
interest (the "Security Interest") in, and assigns to the Secured Party, the
assets described below and all parts, accessories, attachments, additions,
replacements, accessions, substitutions, increases, profits, income,
distributions, proceeds and products thereof and thereto in any form
(including, without limitation, insurance proceeds) together with all records
(including, without limitation, computer tapes, disks and records) relating
thereto (the "Collateral"):
(a) All of the Debtor's inventory (whether now owned or hereafter
acquired), including without limitation all goods held for sale or
lease or to be furnished under contracts of service, raw materials,
work in process and materials to be used or consumed in the Debtor's
business.
(b) All of the Debtor's right to receive payments from any source
and for any reason (whether characterized as accounts, chattel paper,
choses-in-action, contract rights, general intangibles, instruments,
notes or otherwise) (whether now existing or hereafter arising)
including, without limitation, the Debtor's right to receive payments
for goods and other products sold or leased or for services rendered,
whether or not earned by performance or recognized or billed by the
Debtor.
(c) All of the Debtor's receivables, chattel paper, notes,
securities, and instruments, including the right to receive payments
thereunder (whether now existing or hereafter arising).
(d) All of the Debtor's general intangibles, including without
limitation copyrights, trademarks, trade names, service marks,
patents, patent drawings, designs and formulas.
(e) All of the Debtor's furniture and equipment, including,
without limitation, all office equipment, office furniture, computers,
computer software, modems, interface equipment, computer terminals,
printers, peripheral computer
<PAGE>
equipment, accessory equipment, hand and power tools, trucks,
automobiles, heavy equipment and other motor vehicles, machinery and
equipment of all classes.
(f) All of the Debtor's contract rights including, without
limitation, the Debtor's rights under distribution contracts,
franchise agreements, license agreements, sales contracts, unfilled
customer orders, and lease agreements.
(g) All of the Debtor's revenues, income, receipts and money
received as a result of or in connection with the Debtor's: (i)
operation, ownership or sale of property; (ii) performance of
services; or (iii) sale of assets or otherwise.
(h) All of the Debtor's deposit accounts, certificates of
deposit, investment accounts, money market funds, mutual funds, cash
and cash equivalents.
The Collateral also includes other assets of the same class or classes
hereafter owned or acquired by the Debtor and the Secured Party shall have a
security interest in all such after acquired assets and all parts, accessories,
attachments, additions, replacements, accessions, substitutions, increases,
profits, income, distributions, proceeds and products thereof in any form.
2. Indebtedness Secured. The borrowing relationship between the Debtor
and the Secured Party may be a continuing one and may include numerous types of
extensions of credit, loans, overdraft payments or advances made directly or
indirectly to or for the benefit of the Debtor. Accordingly, this Agreement and
the Security Interest created by it secures payment of all obligations of any
kind owing by the Debtor to the Secured Party (the "Indebtedness"). The
Indebtedness includes, without limitation, those obligations of the Debtor
which: (a) are now existing or hereafter incurred; (b) are direct or indirect;
or (c) arise from loans, guaranties, endorsements, letters of credit,
reimbursement agreements, drafts, acceptances or otherwise. The Indebtedness
may be: (a) related or unrelated to the extension of credit contemplated in
that certain Amended and Restated Loan Agreement, dated as of the date hereof
between the Debtor and the Secured Party (as amended or restated from time to
time, the "Loan Agreement"), or any extensions, renewal or modifications
thereof; (b) of the same or a different class as the primary obligation; and
(c) from time to time reduced or extinguished and thereafter increased or
re-incurred. The Indebtedness specifically includes, without limitation, any
sums advanced and any expenses or obligations incurred by the Secured Party
pursuant to this Agreement or any other agreement concerning, evidencing or
securing obligations of the Debtor to the Secured Party and any liabilities of
the Debtor to the Secured Party arising from any sources whatsoever.
2
<PAGE>
3. Warranties of Debtor. The Debtor warrants and so long as this
Agreement continues in force shall be deemed continuously to warrant that:
(a) The Debtor is the owner of the Collateral free of all
security interests or other encumbrances, except the Security Interest
and except for liens and other matters set forth on Exhibit "A"
attached hereto.
(b) The Debtor is authorized to enter into the Security
Agreement.
(c) The Collateral is used or bought for use primarily in
business or professional operations.
(d) The Collateral is or will be located at the Debtor's
addresses specified on Exhibit "B" attached hereto.
(e) The chief executive office of the Debtor is at the address
set forth above. The Debtor does not operate under any trade names.
(f) Each instrument, account, general intangible, receivable and
chattel paper constituting the Collateral is genuine and enforceable
in accordance with its terms against the party obligated to pay the
same (the "Account Debtor"), and each Account Debtor has no defense,
setoff, claim or counterclaim against the Debtor.
(g) The amount represented by the Debtor to the Secured Party as
owing by each Account Debtor or by all Account Debtors is the correct
amount actually and unconditionally owing by such Account Debtor or
Debtors, except for normal cash discounts where applicable.
4. Covenants of Debtor. So long as this Agreement has not been
terminated as provided hereafter, the Debtor: (a) will defend the Collateral
against the claims of all other persons except for liens and other matters set
forth on Exhibit "A" attached hereto; (b) will keep the Collateral free from
all security interests or other encumbrances, except the Security Interest and
except for liens and other matters set forth on Exhibit "A" attached hereto;
(c) will not assign, deliver, sell, transfer, lease or otherwise dispose of any
of the Collateral or any interest therein without the prior written consent of
the Secured Party, except that prior to an Event of Default, the Debtor may
sell or lease inventory in the ordinary course of the Debtor's business and may
sell or remove worn-out or obsolete equipment in the ordinary course of the
Debtor's business; (d) will keep in accordance with generally accepted
accounting principles consistently applied, accurate and complete records
concerning the Collateral and upon the Secured Party's request will mark any of
such records and all or any other
3
<PAGE>
Collateral to give notice of the Security Interest and will permit the Secured
Party or its agents to inspect the Collateral and to audit and make abstracts
of such records or any of the Debtor's books, ledgers, reports, correspondence
and other records; (e) upon demand, will deliver to the Secured Party any
documents of title and any chattel paper representing or relating to the
Collateral or any part thereof, schedules, invoices, shipping or delivery
receipts, purchase orders, contracts or other documents representing or
relating to purchases or other acquisitions or sales or leases or other
dispositions of the Collateral and proceeds thereof and any and all other
schedules, documents and statements which the Secured Party may from time to
time reasonably request; (f) will notify the Secured Party immediately of any
default by Account Debtors in payment or other performance of material
obligations with respect to any Collateral; (g) without the Secured Party's
written consent, will not make or agree to make any alteration, modification or
cancellation of or substitution for or credits adjustments or allowances on any
Collateral; (h) will keep the Collateral at the addresses specified in Exhibit
"B" until the Secured Party is notified in writing of any change in its
location, and the Debtor will not change the location of the Debtor's chief
executive office without the written consent of the Secured Party (which
consent shall not be unreasonably withheld or delayed ), except that the Debtor
shall be entitled to change its chief executive office to a location in
Jacksonville, Florida without the Secured Party's prior consent; (i) will
notify the Secured Party promptly in writing of any change in the Debtor's
address, name, trade names or identity from that specified above or of any
change in the location of the Collateral; (j) will permit the Secured Party or
its agents to inspect the Collateral; (k) will keep the Collateral in good
condition and repair and will not use the Collateral in violation of any
provisions of this Agreement, any applicable statute, regulation or ordinance
or any policy of insurance insuring the Collateral; (l) will execute and
deliver to the Secured Party such financing statements, landlord waivers and
other documents reasonably requested by the Secured Party, and take such other
action and provide such further assurances as the Secured Party may reasonably
deem advisable to evidence, perfect or enforce the Security Interest created by
this Agreement; (m) will pay all taxes, assessments and other charges of every
nature which may be levied or assessed against the Collateral (unless the same
are being contested in good faith); (n) will insure the Collateral against
risks by obtaining policies (none of which shall be cancellable without at
least 30 days prior written notice to the Secured Party) in coverage, form and
amount and with companies reasonably satisfactory to the Secured Party,
containing a loss payee provision in favor of the Secured Party, and at the
Secured Party's request will deliver each policy or certificate of insurance
therefor to the Secured Party; (o) will prevent any part of the Collateral from
becoming an accession to other goods not covered by this Agreement; (p) will
prevent the Collateral or any part of the Collateral from becoming a fixture;
and (q) if any
4
<PAGE>
certificate of title may be issued with respect to any of the Collateral, will
cause the Secured Party's interest under this Agreement to be noted on the
certificate and will deliver the original certificate to the Secured Party.
5. Verification. The Secured Party may verify any Collateral in any
manner and through any medium which the Secured Party may deem appropriate, and
the Debtor shall furnish such assistance as the Secured Party may reasonably
require in connection therewith.
6. Default.
(a) Each of the following shall constitute an "Event of Default"
hereunder: (i) the occurrence of an Event of Default under the Loan
Agreement; (ii) failure by the Debtor to perform any material
obligations under this Agreement or under any other agreement between
the Debtor and the Secured Party or by the Debtor in favor of the
Secured Party, time being of the essence (subject, however, to any
applicable notice and cure periods); (iii) material falsity in any
certificate, statement, representation, warranty or audit at any time
furnished by or on behalf of the Debtor or any endorser or guarantor
or any other party liable for payment of all or part of the
Indebtedness, pursuant to or in connection with this Agreement or
otherwise to the Secured Party, including warranties in this Agreement
and including any omission to disclose any substantial contingent or
liquidated liabilities required to be disclosed) or any material
adverse change in facts disclosed by any certificate, statement,
representation, warranty or audit furnished to the Secured Party; or
(iv) any attachment or levy against the Collateral or any other
occurrence which inhibits the Secured Party's free access to the
Collateral (including, without limitation, the Secured Party's receipt
of any notice from a lessor of real property where collateral is
located indicating that the lease will be terminated prior to its
scheduled termination date) (except, however, that the relocation of
the Debtor's principal offices to Jacksonville, Florida shall not be
deemed an Event of Default hereunder or under any other Loan
Document).
(b) Upon the occurrence of an Event of Default, the Secured Party
may exercise such remedies and rights as are available hereunder,
under the Loan Agreement or otherwise (including without limitation,
acceleration of the Indebtedness or any part thereof).
(c) Upon the occurrence of any Event of Default, the Secured
Party's rights with respect to the Collateral shall be those of a
secured party under the Uniform Commercial Code and any other
applicable law in effect from time to time. The Secured Party shall
also have any additional rights granted
5
<PAGE>
herein and in any other agreement now or hereafter in effect between
the Debtor and the Secured Party. If requested by the Secured Party
after the occurrence of an Event of Default, the Debtor will assemble
the Collateral and make it available to the Secured Party at a place
to be designated by the Secured Party.
(d) The Debtor agrees that any notice by the Secured Party of the
sale or disposition of the Collateral or any other intended action
hereunder, whether required by the Uniform Commercial Code or
otherwise, shall constitute reasonable notice to the Debtor if the
notice is mailed by regular or certified mail, postage prepaid, at
least five days before the action to the Debtor's address as specified
in this Agreement or to any other address which the Debtor has
specified in writing to the Secured Party as the address to which
notices shall be given to the Debtor.
(e) The Debtor shall pay all costs and expenses incurred by the
Secured Party in enforcing this Agreement, realizing upon any
Collateral and collecting any Indebtedness (including a reasonable
attorney's fee) whether suit is brought or not and whether incurred in
connection with collection, trial, appeal or otherwise and, to the
extent of the Debtor's liability for repayment of any of the
Indebtedness, shall be liable for any deficiencies in the event the
proceeds of disposition of the Collateral do not satisfy the
Indebtedness in full. Nothing contained herein shall be deemed to
require the Secured Party to proceed against the Collateral or any
part thereof before or as a condition to the pursuit of any of its
other rights and remedies in respect of the Indebtedness.
7. Miscellaneous.
(a) The Debtor authorizes the Secured Party at the Debtor's
expense to file any financing statements relating to the Collateral
(without the Debtor's signature thereon) which the Secured Party deems
appropriate and the Debtor irrevocably appoints the Secured Party as
the Debtor's attorney-in-fact to execute any such financing statements
in the Debtor's name and to perform all other acts which the Secured
Party deems appropriate to perfect and to continue perfection of the
Security Interest.
(b) The Debtor hereby irrevocably consents to any act by the
Secured Party or its agents in entering upon any premises for the
purposes of either (i) inspecting the Collateral or (ii) taking
possession of the Collateral after any Event of Default in any
commercially reasonable manner; and the Debtor hereby waives its right
to assert against the Secured Party or its agents any claim based upon
trespass or any similar cause
6
<PAGE>
of action for entering upon any premises where the Collateral may be
located.
(c) The Debtor authorizes the Secured Party to collect and apply
against the Indebtedness any refund of insurance premiums or any
insurance proceeds payable on account of the loss or damage to any of
the Collateral and appoints the Secured Party as the Debtor's
attorney-in-fact to endorse any check or draft representing such
proceeds or refund.
(d) Upon the Debtor's failure to perform any of its duties
hereunder, the Secured Party may, but it shall not be obligated to,
perform any of the duties and the Debtor shall forthwith upon demand
reimburse the Secured Party for any expenses incurred by the Secured
Party in so doing.
(e) No delay or omission by the Secured Party in exercising any
right hereunder or with respect to any Indebtedness shall operate as a
waiver of that or any other right, and no single or partial exercise
of any right shall preclude the Secured Party from any other or
further exercise of the right or the exercise of any other right or
remedy. The Secured Party may cure any Event of Default by the Debtor
in any reasonable manner without waiving the Event of Default so cured
and without waiving any other prior or subsequent Event of Default by
the Debtor. All rights and remedies of the Secured Party under this
Agreement and under the Uniform Commercial Code shall be deemed
cumulative.
(f) The Secured Party shall exercise reasonable care in the
custody and preservation of the Collateral to the extent required by
law and it shall be deemed to have exercised reasonable care if it
takes such action for that purpose as the Debtor shall reasonably
request in writing; however, no omission to do any act not requested
by the Debtor shall be deemed a failure to exercise reasonable care
and no omission to comply with any requests by the Debtor shall of
itself be deemed a failure to exercise reasonable care. The Secured
Party shall have no obligation to take and the Debtor shall have the
sole responsibility for taking any steps to preserve rights against
all prior parties to any instrument or chattel paper in the Secured
Party's possession as Collateral or as proceeds of the Collateral. The
Debtor waives notice of dishonor and protest of any instrument
constituting Collateral at any time held by the Secured Party on which
the Debtor is in any way liable and waives notice of any other action
taken by the Secured Party.
(g) After the occurrence of any Event of Default, the Secured
Party may notify any Account Debtor of the Security Interest and may
also direct such Account Debtor to make all payments on the Collateral
to the Secured Party. All payments
7
<PAGE>
on and other proceeds from the Collateral received by the Secured
Party directly or from the Debtor shall be applied to the Indebtedness
in such order and manner and at such time as the Secured Party shall
in its sole discretion determine. Unless the Secured Party notifies
the Debtor in writing that it dispenses with one or more of the
following requirements, any payments on or other proceeds of the
Collateral received by the Debtor after notification to any Account
Debtor in accordance with the terms hereof shall be held by the Debtor
in trust for the Secured Party in the same medium in which received,
shall not be commingled with any assets of the Debtor and shall be
turned over to the Secured Party not later than the next business day
following the day of their receipt. The Debtor shall also promptly
notify the Secured Party of the return to or repossession by the
Debtor of goods underlying any Collateral.
(h) The Debtor authorizes the Secured Party without affecting the
Debtor's obligations hereunder from time to time (i) to take from any
party and hold collateral (other than the Collateral) for the payment
of the Indebtedness or any part thereof, and to exchange, enforce or
release such collateral or any part thereof, (ii) to accept and hold
the endorsement or guaranty of payment of the Indebtedness or any part
thereof and to release or substitute any such endorser or guarantor or
any party who has given any security interest in any collateral as
security for the payment of the Indebtedness or any part thereof or
any party in any way obligated to pay the Indebtedness or any part
thereof; and (iii) upon the occurrence of any Event of Default to
direct the manner of the disposition of the Collateral and any other
collateral and the enforcement of any endorsements or guaranties
relating to the Indebtedness or any part thereof as the Secured Party
in its sole discretion may determine.
(i) The Secured Party may demand, collect and sue for all
proceeds (either in the Debtor's name or the Secured Party's name at
the Secured Party's option), with the right to enforce, compromise,
settle or discharge any proceeds. The Debtor irrevocably appoints the
Secured Party as the Debtor's attorney-in-fact to endorse the Debtor's
name on all checks, commercial paper and other instruments pertaining
to the proceeds before or after the occurrence of an Event of Default.
(j) The rights and benefits of the Secured Party under this
Agreement shall, if the Secured Party agrees, inure to any party
acquiring an interest in the Indebtedness or any part thereof.
8
<PAGE>
(k) The terms "Secured Party" and "Debtor" as used in this
Agreement include the heirs, personal representatives and successors
or assigns of those parties.
(l) If more than one Debtor executes this Agreement, the term
"Debtor" includes each of the Debtors as well as all of them, and
their obligations under this Agreement shall be joint and several.
(m) This Agreement may not be modified or amended nor shall any
provision of it be waived except in writing signed by the Debtor and
by an authorized officer of the Secured Party.
(n) This Agreement shall be construed under the Florida Uniform
Commercial Code and any other applicable laws in effect from time to
time.
(o) This Agreement is a continuing agreement which shall remain
in force until the last to occur of: (i) the payment in full of all
Indebtedness; (ii) the termination of all agreements or obligations
(whether or not conditional) of the Secured Party to extend credit to
the Debtor; and (iii) the termination of the Loan Agreement.
8. Restated Agreement. This Agreement amends, restates, replaces and
supersedes that certain Security Agreement dated November 14, 1996, executed by
the Debtor in favor of the Secured Party.
9. Waiver. IF AN EVENT OF DEFAULT SHOULD OCCUR, THE DEBTOR WAIVES, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THE DEBTOR MAY HAVE TO NOTICE
AND A HEARING BEFORE THE SECURED PARTY TAKES POSSESSION OF THE COLLATERAL BY
SELF-HELP, REPLEVIN, ATTACHMENT, SETOFF OR OTHERWISE.
EXECUTED and delivered as of the day and year first above written.
ARMOR HOLDINGS, INC.
By: /s/ Carol T. Burke
--------------------------------
Its: Vice President - Finance
---------------------------
BARNETT BANK, N.A.
By: /s/ Sharon W. Bowens
-------------------------------
Its: Loan Closing Officer
---------------------------
9
<PAGE>
Exhibit 10.7
PLEDGE AGREEMENT
----------------
This Agreement is made this 26th day of March, 1997, by ARMOR
HOLDINGS, INC., a Delaware corporation (the "Pledgor"), whose address is 191
Nassau Place Road, Yulee, Florida 32097, in favor of BARNETT BANK, N.A. (the
"Secured Party"), whose address is 50 N. Laura Street, Jacksonville, Florida
32202.
Recitals
--------
The Pledgor wishes to pledge certain assets to the Secured Party in
accordance with the terms hereof.
NOW, THEREFORE, for good and valuable consideration, the Pledgor
agrees as follows:
1. Security Interest. The Pledgor hereby pledges to the Secured Party
and gives the Secured Party a continuing and unconditional security interest
(the "Security Interest") in the following described property and in all
increases, income, dividends, distributions and profits therefrom, in all
substitutions therefor and in all proceeds thereof in any form (the
"Collateral"):
(a) 100 shares of common stock of Defense Technology Corporation
of America evidenced by stock certificate number 1 (or any reissue,
replacement or substitute thereof or therefor);
(b) 100 shares of common stock of NIK Public Safety, Inc.
evidenced by stock certificate number 1 (or any reissue, replacement
or substitute thereof or therefor);
(c) 100 shares of common stock of Armor Holdings Properties, Inc.
evidenced by stock certificate number 1 (or any reissue, replacement
or substitute thereof or therefor); and
To be issued
at a later date
CTB /s/ CTB /s/ SWB SWB
------- -------
SWB /s/ SWB /s/ CTB CTB
------- -------
2. Indebtedness Secured. The borrowing relationship between the
Pledgor and the Secured Party may be a continuing one and may include numerous
types of extensions of credit, loans, overdraft payments or advances made
directly or indirectly to or for the benefit of the Pledgor. Accordingly, this
Agreement and the Security Interest created by it secures payment of all
obligations of any kind owing by the Pledgor to the Secured Party (the
"Indebtedness"). The Indebtedness includes, without limitation, those
obligations of the Pledgor which: (a) are now existing or hereafter incurred;
(b) are direct or indirect; or (c) arise from
<PAGE>
loans, guaranties, endorsements, letters of credit, reimbursement agreements,
drafts, acceptances or otherwise. The Indebtedness may be: (a) related or
unrelated to the extension of credit contemplated in that certain Amended and
Restated Loan Agreement of even date herewith between the Pledgor and the
Secured Party (as amended or restated from time to time, the "Loan Agreement"),
or any extensions, renewal or modifications thereof; (b) of the same or a
different class as the primary obligation; and (c) from time to time reduced or
extinguished and thereafter increased or re-incurred. The Indebtedness
specifically includes, without limitation, any sums advanced and any expenses
or obligations incurred by the Secured Party pursuant to this Agreement or any
other agreement concerning, evidencing or securing obligations of the Pledgor
to the Secured Party and any liabilities of the Pledgor to the Secured Party
arising from any sources whatsoever.
3. Warranties of the Pledgor. The Pledgor represents and warrants and
so long as the Indebtedness remains unpaid shall be deemed continuously to
represent and warrant that: (a) each item constituting Collateral is genuine
and in all respects what it purports to be; (b) the Pledgor is the owner of the
Collateral free of all security interests or other encumbrances except the
Security Interest; (c) the Pledgor is authorized to enter into this Pledge
Agreement; and (d) the Pledgor owns 100% of the outstanding shares of capital
stock of each Issuer (as defined herein) subject to no options, voting trusts,
proxy rights or similar agreements.
4. Irrevocable Proxy. If any part of the Collateral is capital stock,
the Pledgor irrevocably constitutes and appoints the Secured Party, whether or
not the Collateral has been transferred into the name of the Secured Party or
its nominee, as the Pledgor's proxy with full power: (a) to attend all meetings
of stockholders of each issuer (each, an "Issuer") of such capital stock held
after the date of this Agreement and to vote the Collateral at those meetings
in such manner as the Secured Party shall in its sole discretion deem
appropriate, including, without limitation, in favor of liquidation of any
Issuer; (b) to consent in the sole discretion of the Secured Party to any
action by or concerning any Issuer for which the consent of the stockholders of
the Issuer is or may be necessary or appropriate; and (c) without limitation to
do all things which the Pledgor could do as a stockholder of any Issuer, giving
to the Secured Party full power of substitution and revocation. Notwithstanding
the foregoing, the Pledgor alone shall have the rights under this paragraph and
the Secured Party may not exercise those rights (whether or not the Collateral
has been transferred into the name of the Secured Party or its nominee) so long
as no Event of Default has occurred. The proxy contained in this paragraph
shall terminate when this Agreement terminates. The Pledgor hereby revokes all
proxies heretofore given to any person or persons and agrees not to give any
other proxies in derogation of this proxy so long as this Agreement is in
force.
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<PAGE>
5. Covenants of Pledgor. The Pledgor: (a) will defend the Collateral
against the claims of all persons; (b) will keep the Collateral free from all
security interests or other encumbrances except the Security Interest; (c) will
not assign, sell, transfer, deliver or otherwise dispose of the Collateral or
any interest therein or attempt to do the same without the prior written
consent of the Secured Party; (d) will notify the Secured Party promptly in
writing of any change in the Pledgor's address, name or identity, specified
above; (e) in connection herewith will execute and deliver to the Secured Party
such financing statements and other documents, pay all costs of title searches
and filing financing statements and other documents in all public offices
requested by the Secured Party, and take such other action as the Secured Party
may deem advisable to perfect the Security Interest created by this Agreement;
and (f) will pay taxes, assessments and other charges of every nature which may
be levied or assessed against the Collateral.
6. Registered Holder of Collateral. From and after the occurrence of
an Event of Default, the Pledgor authorizes the Secured Party to transfer the
Collateral or any part of it into the Secured Party's name or that of its
nominee so that the Secured Party or its nominee may appear of record as the
sole owner of the Collateral. From and after any such transfer, the Pledgor
waives all right to be advised of or to receive any notices, statements or
communications received by the Secured Party or its nominee as such record
owner.
7. Income from Collateral.
(a) Until the occurrence of an Event of Default, the Pledgor
reserves the right to receive all income from the Collateral. If the
Secured Party receives any of the income prior to the occurrence of
any Event of Default, it will pay the income promptly to the Pledgor.
(b) From and after the occurrence of an Event of Default, the
Pledgor will not demand or receive any income from the Collateral. If
the Pledgor receives any such income, the Pledgor will without demand
pay it promptly to the Secured Party. The Secured Party may apply the
net cash receipts of such income to payment of any of the
Indebtedness. However, the Secured Party shall account for and pay
over to the Pledgor all Collateral remaining, and any income
remaining, after termination of this Agreement.
8. Increases, Profits or Distributions.
(a) Whether or not an Event of Default has occurred, the Pledgor
authorizes the Secured Party: (i) to receive any dividends payable in
stock on the Collateral and any distribution upon the dissolution,
liquidation or reorganization of the issuer of any Collateral; (ii) to
3
<PAGE>
surrender such Collateral or any part thereof in exchange therefor;
and (iii) to hold the receipt from any such dividends payable in
capital stock or any such distribution upon any such dissolution,
liquidation or reorganization as part of the Collateral.
(b) If the Pledgor receives any such dividends payable in capital
stock or any such distribution upon any such dissolution, liquidation
or reorganization, the Pledgor will deliver such receipts promptly to
the Secured Party to be held by the Secured Party as provided in this
paragraph.
9. Default.
(a) Each of the following shall constitute an "Event of Default"
hereunder: (i) the occurrence of an Event of Default under the Loan
Agreement; (ii) failure by the Pledgor to perform any material
obligations under this Agreement or under any other agreement between
the Pledgor and the Secured Party or by the Pledgor in favor of the
Secured Party, time being of the essence (subject, however, to any
applicable notice and cure periods); and (iii) material falsity in any
certificate, statement, representation, warranty or audit at any time
furnished by or on behalf of the Pledgor or any endorser or guarantor
or any other party liable for payment of all or part of the
Indebtedness, pursuant to or in connection with this Agreement or
otherwise to the Secured Party, including warranties in this Agreement
and including any omission to disclose any substantial contingent or
liquidated liabilities required to be disclosed) or any material
adverse change in facts disclosed by any certificate, statement,
representation, warranty or audit furnished to the Secured Party;
(b) Upon the occurrence of an Event of Default, the Secured Party
may: (i) declare all or any part of the Indebtedness to be immediately
due without notice; and (ii) exercise such other rights and remedies
as are available hereunder or otherwise.
(c) Upon the occurrence of any Event of Default, the Secured
Party's rights with respect to the Collateral shall be those of a
secured party under the Uniform Commercial Code and under any other
applicable law from time to time in effect. The Secured Party shall
also have any additional rights granted herein and any other agreement
now or hereafter in effect between the Pledgor and the Secured Party.
If requested by the Secured Party after the occurrence of an Event of
Default, the Pledgor will assemble the Collateral and make it
available to the Secured Party at a place to be designated by the
Secured Party.
(d) The Pledgor agrees that any notice by the Secured Party of
the sale or disposition of Collateral or any other
4
<PAGE>
intended action hereunder, whether required by the Uniform Commercial
Code or otherwise, shall constitute reasonable notice to the Pledgor
if the notice is mailed by regular or certified mail, postage prepaid,
at least ten days before the action to the Pledgor's address as
specified in this Agreement or to any other address which the Pledgor
has specified in writing to the Secured Party as the address to which
notices shall be given to the Pledgor.
(e) The Pledgor shall pay all costs and expenses incurred by the
Secured Party in enforcing this Pledge Agreement, realizing upon any
Collateral and collecting any Indebtedness (whether incurred in
connection with collection, trial or appeal) including a reasonable
attorney's fee whether suit is brought or not and to the extent of the
Pledgor's liability for repayment of any of the Indebtedness, shall be
liable for any deficiency in the event that disposition of the
Collateral does not satisfy the Indebtedness in full.
10. Miscellaneous.
(a) The Pledgor appoints the Secured Party as the Pledgor's
attorney-in-fact to perform all acts which the Secured Party deems
appropriate, to perfect and continue the Security Interest, to protect
and preserve the Collateral and to endorse and transfer all or any
part of the Collateral.
(b) Upon the Pledgor's failure to perform any of its duties
hereunder the Secured Party may, but it shall not be obligated to,
perform any of such duties and the Pledgor shall forthwith upon demand
reimburse the Secured Party for any reasonable expense incurred by the
Secured Party in so doing.
(c) No delay or omission by the Secured Party in exercising any
right hereunder or with respect to any Indebtedness shall operate as a
waiver of that or any other right and no single or partial exercise of
any right shall preclude the Secured Party from any other or further
exercise of that right or the exercise of any other right or remedy.
The Secured Party may cure any default by the Pledgor in any
reasonable manner without waiving the default so cured and without
waiving any other prior or subsequent default by the Pledgor. All
rights and remedies of the Secured Party under this Agreement and
under the Uniform Commercial Code shall be deemed cumulative.
(d) The Secured Party shall exercise reasonable care in the
custody and preservation of the Collateral to the extent required by
law and it shall be deemed to have exercised reasonable care if it
takes such action for that purpose as the Pledgor shall reasonably
request in writing. However, no omission to do any act not requested
by the Pledgor shall be deemed a failure to exercise reasonable care
and no omission
5
<PAGE>
to comply with any requests by the Pledgor shall of itself be deemed a
failure to exercise reasonable care.
(e) The rights and benefits of the Secured Party under this
Agreement shall, if the Secured Party agrees, inure to any party
acquiring any interest in the Indebtedness or any part thereof.
(f) The terms "Secured Party" and "Pledgor" as used in this
Agreement include the heirs, personal representatives, and successors
or assigns of those parties.
(g) This Agreement may not be modified or amended nor shall any
provision of it be waived except in writing signed by the Pledgor and
by an authorized officer of the Secured Party.
(h) This Agreement shall be construed under the Uniform
Commercial Code of Florida and any other applicable Florida laws in
effect from time to time.
(i) This Agreement is a continuing agreement which shall remain
in force until the last to occur of: (i) the payment in full of all
Indebtedness; (ii) the termination of all obligations and agreements
(whether or not conditional) of the Secured Party to extend credit to
the Pledgor; and (iii) the termination of the Loan Agreement.
11. Waiver. The Pledgor hereby waives any right that the Pledgor may
have to notice and a hearing before possession or sale of any Collateral is
effected by the Secured Party by self-help, replevin, attachment or otherwise.
DATED the day and year first above written.
ARMOR HOLDINGS, INC.
By: /s/ Carol T. Burke
--------------------------------
Its: Vice President - Finance
----------------------------
6
<PAGE>
Exhibit 10.8
COLLATERAL ASSIGNMENT
---------------------
THIS AGREEMENT is made as of the 26th day of March, 1997, between
DEFENSE TECHNOLOGY CORPORATION OF AMERICA (the "Assignor"), a Delaware
corporation, having offices located at 191 Nassau Place Road, Yulee, Florida
32097, and BARNETT BANK, N.A. (the "Lender"), having offices located at 50
North Laura Street, Jacksonville, Florida 32202.
RECITALS
--------
Armor Holdings, Inc. (the "Borrower") has executed and delivered its
Renewal Promissory Note (as amended, extended or renewed from time to time, the
"Note") of even date herewith to the Lender in the principal amount of
$20,000,000.00 pursuant to an Amended and Restated Loan Agreement of even date
herewith between the Borrower and the Lender (as amended or restated from time
to time, the "Loan Agreement"). The Assignor has guaranteed payment of the Note
and certain other obligations pursuant to a Guaranty of Payment (as amended or
restated from time to time, the "Guaranty") dated November 14, 1996, as amended
from time to time, executed by the Assignor in favor of the Lender. In order to
induce the Lender to execute and deliver the Loan Agreement, the Assignor has
agreed to grant to the Lender a security interest in certain trademark and
patent rights. This Agreement is being executed contemporaneously with an
Amended and Restated Security Agreement under which the Lender has been granted
a lien on and security interest in goods (the "Other Assets") manufactured and
sold under the Trademarks (as defined herein) and Patents (as defined herein),
whereby the Lender shall have the right to foreclose on the Trademarks and
Patents and the Other Assets in the event of the occurrence of an Event of
Default (as defined in the Loan Agreement).
NOW, THEREFORE, for good and valuable consideration, the parties
hereto agree as follows:
1. (a) To secure the complete and timely satisfaction of all
Indebtedness (as defined herein), the Assignor hereby gives the Lender a
continuing and unconditional security interest in, and collaterally assigns to
the Lender: (i) the entire right, title and interest in and to those certain
trademarks and trademark rights more particularly described on Exhibit "A"
attached hereto, including without limitation all renewals thereof, all
proceeds thereof (such as, by way of example, license royalties and proceeds of
infringement suits), the right to sue for past, present and future infringement
and all rights corresponding thereto throughout the world (all of the foregoing
are collectively called the "Trademarks") and the goodwill of the businesses to
which the Trademarks relate; and (ii) the entire right, title and interest in
and to those certain patents and patent rights more particularly described on
Exhibit "B" attached hereto, including without limitation all renewals thereof,
all proceeds thereof (such as, by
<PAGE>
way of example, license royalties and proceeds of infringement suits), the
rights to sue for past, present and future infringement and all rights
corresponding hereto throughout the world (all of the foregoing are
collectively called the "Patents").
(b) The term "Indebtedness" means all obligations of any kind owing
by the Assignor to the Lender. Indebtedness includes, without limitation, those
obligations of the Assignor which: (i) are now existing or hereafter incurred;
(ii) are direct or indirect; or (iii) arise from loans, letters of credit,
drafts, acceptances, guaranties, endorsements or otherwise. The Indebtedness
may be: (i) related or unrelated to the purpose of the original extension of
credit; (ii) of the same or a different class as the primary obligation; and
(iii) from time to time reduced or extinguished and thereafter increased or
reincurred. The Indebtedness includes, without limitation, all amounts now or
hereafter due under the Guaranty.
2. The Assignor covenants and warrants that:
(a) The Trademarks and Patents are subsisting and have not been
adjudged invalid or unenforceable;
(b) To the best of the Assignor's knowledge, each Trademark and
Patent is valid and enforceable;
(c) No claim has been made that the use of any Trademark or Patent
does or may violate the rights of any third person;
(d) The Assignor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to the Trademarks and
the Patents, free and clear of any liens, charges and encumbrances,
including without limitation pledges, assignments, licenses,
registered user agreements and covenants by the Assignor not to sue
third persons; and
(e) The Assignor has the unqualified right to enter into this
Agreement and perform its terms.
3. The Assignor agrees that, until all of the Indebtedness shall have
been satisfied in full and the Guaranty shall have terminated, it will not
enter into any agreement (for example, a license agreement) which is
inconsistent with the Assignor's obligations under this Agreement, except for
license agreements entered into in arm's length transactions in the ordinary
course of business.
4. If, before the Indebtedness shall have been satisfied in full, the
Assignor shall obtain rights to any new trademarks or patents, or applications
or other rights relating thereto, the provisions of Section 1 hereto shall
automatically apply thereto
2
<PAGE>
and the Assignor shall give the Lender prompt written notice thereof.
5. The Assignor authorizes the Lender to modify this Agreement by
amending it to include any future trademarks or patents, or any rights therein,
issued to the Assignor.
6. If any Event of Default shall have occurred under the Loan
Agreement, the Lender shall have, in addition to all other rights and remedies
given it by this Agreement, those allowed by law and the rights and remedies of
a secured party under the Uniform Commercial Code as enacted in any
jurisdiction in which the Trademarks and Patents may be located and, without
limiting the generality of the foregoing, the Lender may immediately, without
demand of performance and without other notice or demand whatsoever to the
Assignor (except as set forth below), all of which are hereby expressly waived,
and without advertisement, sell at public or private sale or otherwise realize
upon, in Florida, or elsewhere, the Trademarks and the Patents, or any interest
which the Assignor may have therein, and after deducting from the proceeds of
sale or other disposition of the Trademarks or Patents all expenses (including
all reasonable expenses for brokers' fees and legal services), shall apply the
residue of such proceeds toward the payment of the Indebtedness. Any remainder
of the proceeds after payment in full of the Indebtedness shall be paid over to
the Assignor. Notice of any sale or other disposition of the Trademarks or
Patents shall be given to the Assignor at least five (5) days before the time
of any intended public or private sale or other disposition of any Trademark or
Patent is to be made, which the Assignor hereby agrees shall be reasonable
notice of such sale or other disposition. At any such sale or other
disposition, any holder of the Note (as defined in the Loan Agreement) or the
Lender may, to the extent permissible under applicable law, purchase the whole
or any part of any Trademark or Patent sold, free from any right of redemption
on the part of the Assignor, which right is hereby waived and released.
7. At such time as the Assignor shall completely satisfy all of the
Indebtedness and relinquish in writing its right, if any, to obtain further
advances from the Lender, this Agreement shall terminate.
8. Any and all fees, costs and expenses, of any kind or nature,
including reasonable attorneys' fees and legal expenses incurred by the Lender
in connection with the preparation of this Agreement and all other documents
relating hereto and the consummation of this transaction, the filing or
recording of any documents (including all taxes in connection therewith) in
public offices, the payment or discharge of any taxes, counsel fees,
maintenance fees, encumbrances or otherwise protecting, maintaining or
preserving any Trademark or Patent, or in defending or prosecuting any actions
or proceedings arising out of or related to any Trademark or Patent, shall be
borne and paid by the Assignor on demand by the Lender and until so paid shall
be added to the
3
<PAGE>
principal amount of the Indebtedness and shall bear interest at the Default
Rate (as that term is defined in the Note).
10. The Assignor shall have the duty, through counsel acceptable to
the Lender, until the Indebtedness shall have been paid in full, to make
federal application on registrable but unregistered trademarks or patents, to
file and prosecute opposition and cancellation proceedings and to do any and
all acts which are necessary or desirable to preserve and maintain all rights
in each Trademark or Patent. Any expenses incurred in connection with any
Trademark or Patent shall be borne by the Assignor. The Assignor shall not
abandon any Trademark or Patent without the consent of the Lender, which
consent shall not be unreasonably withheld.
11. The Assignor shall have the right with the prior written consent
of the Lender, which consent will not be unreasonably withheld, to bring any
opposition proceedings, cancellation proceedings or lawsuit in its own name to
enforce or protect any Trademark or Patent, in which event the Lender may, if
necessary, be joined as a nominal party to such suit if the Lender shall have
been satisfied that it is not thereby incurring any risk of liability because
of such joinder. The Assignor shall promptly, upon demand, reimburse and
indemnify the Lender for all damages, costs and expenses, including attorneys'
fees, incurred by the Lender in the fulfillment of the provisions of this
Section.
12. In the event of the occurrence of any Event of Default under the
Loan Agreement, the Assignor hereby authorizes and empowers the Lender to make,
constitute and appoint any officer or agent of the Lender as the Lender may
select, in its exclusive discretion, as the Assignor's true and lawful
attorney-in-fact, with the power to endorse the Assignor's name on all
applications, documents, papers and instruments necessary for the Lender to use
the Trademarks and the Patents, or to grant or issue any exclusive or
non-exclusive license under each Trademark or Patent to anyone else, or
necessary for the Lender to assign, pledge, convey or otherwise transfer title
in or dispose of any Trademark or Patent to anyone else. The Assignor hereby
ratifies all actions that such attorney shall lawfully do or cause to be done
by virtue hereof. This power of attorney shall be irrevocable for the life of
this Agreement.
13. If the Assignor fails to comply with any of its obligations
hereunder, the Lender may do so in the Assignor's name or in the Lender's name,
but at the Assignor's expense, and the Assignor hereby agrees to reimburse the
Lender in full for all expenses, including reasonable attorneys' fees, incurred
by the Lender in protecting, defending and maintaining any Trademark or Patent.
14. No course of dealing between the Assignor and the Lender, nor any
failure to exercise, nor any delay in exercising, on the part of the Lender,
any right, power or privilege hereunder or under the Loan Agreement, or the
Loan Documents as defined therein,
4
<PAGE>
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder or thereunder preclude any other
further exercise thereof or the exercise of any other right, power or
privilege.
15. All of the Lender's rights and remedies with respect to the
Trademarks and the Patents, whether established hereby, by the Loan Agreement,
by any other agreements or by law shall be cumulative and may be exercised
singularly or concurrently. In the event of any conflict between the terms
hereof and the terms of the Loan Agreement or any of the Loan Documents, the
terms giving the greater rights or benefits to the Lender shall govern.
16. The provisions of this Agreement are severable, and if any clause
or provision shall be held invalid and unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction, and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
17. This Agreement is subject to modification only by a writing signed
by the parties, except as provided in Section 5.
18. This Agreement shall inure to the benefit of and be binding upon
the respective successors and permitted assigns of the parties.
19. The validity and interpretation of this Agreement and the rights
and obligations of the parties hereto shall be governed by the laws of the
State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
DEFENSE TECHNOLOGY CORPORATION OF
AMERICA
By: /s/ Carol T. Burke
--------------------------------
Its: Vice President - Finance
----------------------------
BARNETT BANK, N.A.
By: /s/ Sharon W. Bowens
--------------------------------
Its: Loan Closing Officer
----------------------------
5
<PAGE>
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was acknowledged before me this 26th day of
March, 1997, by Carol T. Burke, the Vice President of Finance of Defense
Technology Corporation of America, on behalf of the corporation.
/s/ V. Thomas Fountain
-----------------------------------
Notary Public, State of Georgia,
at Large
My Commission Expires: Jan 16, 2000
(Notary Seal)
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was acknowledged before me this 26th day of
March, 1997, by Sharon W. Bowens, the Loan Closing Officer of Barnett Bank,
N.A., on behalf of the bank.
/s/ V. Thomas Fountain
-----------------------------------
Notary Public, State of Georgia,
at Large
My Commission Expires: Jan 16, 2000
(Notary Seal)
6
<PAGE>
Exhibit 10.9
AMENDMENT TO ACCEPTANCE CREDIT AGREEMENT
----------------------------------------
THIS AMENDMENT is made this 26th day of March, 1997, by and between
ARMOR HOLDINGS, INC. (the "Borrower") and BARNETT BANK, N.A. (the "Bank").
Recitals
The Borrower and the Bank entered into an Acceptance Credit Agreement
(as amended from time to time, the "Acceptance Agreement") dated November 14,
1996, pursuant to which the Bank has provided an acceptance credit facility to
the Borrower. The parties wish to amend the Acceptance Agreement in accordance
with the terms hereof.
NOW, THEREFORE, for good and valuable consideration, the parties agree
as follows:
1. Section 7 of the Acceptance Agreement is hereby amended so that,
from and after the date hereof, such section shall read as follows:
7. The Bank's obligation to accept Drafts hereunder shall
terminate on the Revolving Expiration Date (as defined in the Note).
The Bank shall not in any event be required to accept Drafts hereunder
during the continuance of a Default or an Event of Default hereunder
or under the Loan Agreement.
2. From and after the date hereof, all references in the Acceptance
Agreement to the "Loan Agreement" shall mean the Amended and Restated Loan
Agreement of even date herewith, as the same may be amended or restated from
time to time, between the Borrower and the Bank.
3. The Borrower certifies that as of the date hereof: (a) all of its
representations and warranties in the Acceptance Agreement are true and correct
as if made on the date hereof; and (b) no Default or Event of Default has
occurred under the Acceptance Agreement. The Acceptance Agreement shall
continue in full force and effect except as modified herein.
DATED the day and year first above written.
ARMOR HOLDINGS, INC.
By: /s/ Carol T. Burke
--------------------------------
Its: Vice President - Finance
----------------------------
<PAGE>
BARNETT BANK, N.A.
By: Sharon W. Bowens
--------------------------------
Its: Loan Closing Officer
----------------------------
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 26th day of March, 1997, by Carol T. Burke the Vice President of
Finance of Armor Holdings, Inc., on behalf of the corporation, in Camden
County, Georgia.
/s/ V. Thomas Fountain
------------------------------
Notary Public, State and County
aforesaid
Print Name: V. Thomas Fountain
My Commission Expires: Jan 16, 2000
[Notary Seal]
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 26th day of March, 1997, by Sharon W. Bowens the Loan Closing
Officer of Barnett Bank, N.A., on behalf of the bank, in Camden County, Georgia.
/s/ V. Thomas Fountain
------------------------------
Notary Public, State and County
aforesaid
Print Name: V. Thomas Fountain
My Commission Expires: Jan 16, 2000
[Notary Seal]
2
<PAGE>
CONSENT
Each of the undersigned has executed a Guaranty of Payment (each, a
"Guaranty") dated November 14, 1996, pursuant to which it has guaranteed
certain obligations of Armor Holdings, Inc. (the "Borrower") to Barnett Bank,
N.A. (the "Bank"). Each of the undersigned hereby consents to the
Borrower's execution of: (i) an Amended and Restated Loan Agreement (as
amended or restated from time to time, the "Restated Loan Agreement") of even
date herewith by and between the Borrower and the Bank; and (ii) a Renewal
Promissory Note (as amended, extended or renewed from time to time, the
"Renewal Note") of even date herewith in favor of the Bank in the principal
amount of $20,000,000. Each of the undersigned reaffirms its obligations under
the Guaranty executed by it, and each agrees that: (i) its obligations under
the Guaranty executed by it shall not be discharged or otherwise impaired as a
result of the Borrower's execution of the Restated Loan Agreement or the
Renewal Note; (ii) all references in each Guaranty to the "Loan Agreement"
shall mean the Restated Loan Agreement; (iii) all references in each Guaranty
to the "Note" shall mean the Renewal Note; and (iv) the obligations covered
under the Guaranty include, without limitation, all amounts now or hereafter
due under the Renewal Note (as the same may be amended, extended or renewed
from time to time) together with all other Obligations as defined in the
Guaranty (subject only to the specific limitations set forth in paragraph 23 of
each Guaranty).
Dated as of March 26, 1997.
NIK PUBLIC SAFETY, INC.
By:__________________________________
Its:______________________________
ARMOR HOLDINGS PROPERTIES, INC.
By:__________________________________
Its:______________________________
DEFENSE TECHNOLOGY CORPORATION OF
AMERICA
By:__________________________________
Its:______________________________
<PAGE>
ACCEPTED:
BARNETT BANK, N.A.
By:______________________________
Its:__________________________
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this _____ day of March, 1997, by ________________________ the
_____________________ of Nik Public Safety, Inc., on behalf of the corporation,
in Camden County,
Georgia.
------------------------------
Notary Public, State and County
aforesaid
Print Name: __________________
My Commission Expires:
[Notary Seal]
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this _____ day of March, 1997, by ________________________ the
_____________________ of Armor Holdings Properties, Inc., on behalf of the
corporation, in Camden
County, Georgia.
------------------------------
Notary Public, State and County
aforesaid
Print Name: __________________
My Commission Expires:
[Notary Seal]
<PAGE>
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this _____ day of March, 1997, by ________________________ the
_____________________ of Defense Technology Corporation of America, on behalf
of the corporation, in
Camden County, Georgia.
------------------------------
Notary Public, State and County
aforesaid
Print Name: __________________
My Commission Expires:
[Notary Seal]
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this _____ day of March, 1997, by ________________________ the
_____________________ of Barnett Bank, N.A., on behalf of the bank, in Camden
County, Georgia.
------------------------------
Notary Public, State and County
aforesaid
Print Name: __________________
My Commission Expires:
[Notary Seal]
ah1-cg
<PAGE>
GUARANTY OF PAYMENT
THIS GUARANTY is made this 14th day of November, 1996, by
_________________________ (the "Guarantor") in favor of BARNETT BANK, N.A. (the
"Bank").
W I T N E S S E T H :
Armor Holdings, Inc. (the "Borrower") and the Bank are parties to a
Loan Agreement (as amended or restated from time to time, the "Loan Agreement")
of even date herewith. The Borrower, pursuant to the Loan Agreement, has
executed and delivered a promissory note (as amended, extended or renewed from
time to time, the "Note") of even date herewith in the original principal
amount of $10,000,000.00 in favor of the Bank. As an inducement to the Bank to
extend, renew, or continue credit to the Borrower, the Guarantor has agreed to
guarantee certain Obligations (as defined below) of the Borrower and to execute
and deliver this Guaranty.
NOW, THEREFORE, in consideration of loans, advances or other credit
now or hereafter made or extended by the Bank to the Borrower, and to enable
such loans, advances or other credit to be maintained or obtained by the
Borrower, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the Guarantor, the Guarantor hereby agrees
with the Bank as follows:
1. The Guarantor hereby irrevocably guarantees the payment to the
Bank when due, whether by acceleration or otherwise, of all Obligations of the
Borrower to the Bank (subject, however, to the limitations set forth in
paragraph 23 hereof). -As used in this Agreement, the -term "Obligations"
means: (a) all principal, interest, costs, expenses and other amounts now or
hereafter due under the Note (including, without limitation, all principal
amounts advanced thereunder before, on or after the date hereof); and (b) all
other amounts now or hereafter payable by the Borrower under any of the Loan
Documents (as such term is defined in the Loan Agreement).
2. If any of the Obligations are not paid when due, after the
expiration of any applicable cure period, the Guarantor will forthwith pay all
such Obligations of the Borrower to the Bank (subject, however, to the
limitations set forth in paragraph 23 hereof). The Guarantor further agrees to
pay the Bank, upon demand, all reasonable costs and expenses, including
reasonable attorneys' and legal assistants' fees incurred in connection with
any trial or appellate proceedings or otherwise, that may be incurred by the
Bank in exercising its rights and remedies with respect to payment of the
Obligations or its rights and remedies against the Guarantor under this
Agreement.
3. The Guarantor hereby:
(a) Assents to all terms and agreements heretofore or
<PAGE>
hereafter made by the Borrower with the Bank;
(b) Agrees to make all payments hereunder in lawful
money of the United States of America in immediately available funds without
setoff or counterclaim;
(c) Consents that the Bank may, without further consent
from or notice to the Guarantor, and without in any way diminishing the
obligation of the Guarantor under this Agreement:
(i) Exchange, release or surrender to the
Borrower or to any guarantor, pledgor, or grantor any collateral, or waive,
release or subordinate any security interest, in whole or in part, now or
hereafter held as security for any of the Obligations;
(ii) Accept any new collateral for the
Obligations;
(iii) Waive or delay the exercise of any of its
rights or remedies against the Borrower or any other person or
entity, including, without limitation, any other guarantor;
(iv) Release any other guarantor or
endorser from any liability;
(v) Renew, extend, or modify the terms of
any of the Obligations or any instrument or agreement evidencing the same;
(vi) Apply payments by the Borrower, the
Guarantor, or any other person or entity, to the Obligations or to other
indebtedness of any such person or entity in such order as the Bank, in its
discretion, deems appropriate;
(vii) Abstain from taking advantage of or
realizing upon any security interest or other Guarantee;
(d) Waives all notice of:
(i) The Bank's acceptance hereof or its
intention to act, or its action, in reliance hereon;
(ii) The present existence or future
incurring of any of the Obligations or any terms or amounts thereof or any
change therein;
(iii) Any default by the Borrower, any
endorser, surety, pledgor, grantor of security, or guarantor; and
(iv) The obtaining or release of any
guaranty or surety agreement (in addition to this Agreement), pledge,
assignment, or other security for any of the Obligations: and
-2-
<PAGE>
(e) Waives notice of presentment, demand, notice of
demand, presentment for payment, protest, notice of nonpayment or dishonor,
notice of protest and any other demands and notices required by law in
connection with this Guaranty or any instrument evidencing any Obligations,
except as such waiver may be expressly prohibited by law, and waives any
requirement that suit against it under this Agreement be brought within any
period of time shorter than the general statute of limitations applicable to
contracts under seal.
4. The Guarantor hereby waives and agrees not to assert or take
advantage of:
(a) any defense arising by virtue of:
(i) the lack of authority, death or
disability of any other party, or revocation hereof by any other party;
(ii) the failure of the Bank to file or
enforce a claim of any kind; or
(iii) the failure of the Bank to record any
document or perfect any lien;
(b) notice of the existence, creation or incurring of
any new or additional indebtedness, or obligation or any action or non-action
on the part of the Borrower, the Bank, any endorser, any guarantor under this
or any other instrument, any creditor of the Borrower, or any other person
whomsoever, in connection with any obligation or evidence of indebtedness held
by the Bank as collateral or in connection with any indebtedness or any
obligation hereby guaranteed;
(c) any defense based upon an election of remedies by
the Bank, including without limitation, an election to proceed by non-judicial
rather than judicial foreclosure (if the right to proceed by non-judicial
foreclosure is available to the Bank); and
(d) any duty on the part of the Bank to disclose to the
Guarantor any facts which the Bank may now or hereafter know about the Borrower
or any security for the Obligations, regardless of whether the Bank has reason
to believe that any such facts materially increase the risk beyond that which
the Guarantor intends to assume or has reason to believe that such facts are
unknown to the Guarantor or has a reasonable opportunity to communicate such
facts to the Guarantor, it being understood and agreed that the Guarantor is
fully responsible for being and keeping informed of the financial condition of
the Borrower and the status of any security for the Obligations and of all
circumstances bearing on the risk of non-payment of all Obligations hereby
guaranteed.
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5. The Guarantor hereby waives any right or claim of right to cause
a marshaling of any of the Borrower's assets or the assets of any other party
now or hereinafter held as security for any Obligations.
6. The Bank's rights hereunder shall not be impaired or stayed as a
result of any dissolution of the Borrower or any bankruptcy or insolvency
proceedings involving the Borrower (including, without limitation, any
discharge of the Borrower or its debts in any such proceedings). The
Obligations shall include, without limitation, any amounts advanced to or for
the benefit of the Borrower or any successor thereto from and after the
occurrence or commencement of any such dissolution or proceedings. If any such
bankruptcy or insolvency proceedings are commenced by or against the Borrower,
the full amount of all Obligations then outstanding shall become immediately
due and payable by the Guarantor (whether or not the Borrower then owes the
Obligations on an accelerated basis).
7. The liability of the Guarantor under this Agreement is absolute,
irrevocable, unconditional, unlimited (except as set forth in paragraph 23
hereof) and continuing, without regard to the liability of any- other person,
and shall not in any manner be affected by reason of any action taken or not
taken by the Bank, nor by the partial or complete unenforceability or
invalidity of any other guaranty or surety agreement, pledge, assignment or
other security for any of the Obligations. Failure to sign this or any other
guarantee by any other person shall not discharge the liability of any signer.
No delay in making demand on the Guarantor for satisfaction of its liability
hereunder shall prejudice the Bank's right to enforce such satisfaction. All of
the Bank's rights and remedies shall be cumulative and any failure of the Bank
to exercise any right hereunder shall not be construed as a waiver of the right
to exercise the same or any other right at any time, and from time to time,
thereafter.
8. This Guaranty shall continue in effect until the last to occur
of: (a) the payment of all Obligations, including any renewals, extensions or
modifications thereof, in full if such payments of the Obligations have become
final and are not subject to being refunded as a preference or fraudulent
transfer under the Bankruptcy Code or other applicable law; and (b) the
termination of all loan agreements, loan documents and loan commitments between
the Borrower and the Bank.
9. This Guaranty is fully enforceable regardless of any defenses
which the Borrower may assert on the underlying debt, including but not limited
to failure of consideration, breach of warranty, payment, statute of frauds,
statute of limitations, accord and satisfaction, and usury.
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10. The Guarantor agrees that, if at any time all or any part of
any payment previously applied by the Bank to any of the Obligations must be
returned by the Bank for any reason, whether by court order, administrative
order, or settlement, the Guarantor shall be liable for the full amount
returned as if such amount had never been received by the Bank, notwithstanding
any termination of this Agreement or the cancellation of any note or other
agreement evidencing any of the Obligations.
11. The Bank shall have the right to proceed against the Guarantor
without first proceeding against the Borrower or any property securing payment
of the Note, or any of the loan documents, or any other guarantor or endorser
of the Note or the Obligations.
12. The Guarantor waives and agrees not to assert any right to
which it may be or become entitled, whether by subrogation, contribution,
indemnity, reimbursement or otherwise, against the Borrower, any other
guarantor or any of their respective properties, by reason of the performance
by the Guarantor of its obligations under this Agreement, under any pledge or
security agreement or otherwise.
13. To secure the prompt payment and performance of the
Obligations, the Guarantor grants to the Bank a continuing first lien security
interest in all property of the Guarantor now or at any time hereafter in the
possession of the Bank and all proceeds of all such property. The Guarantor
agrees that the Bank shall have the rights and remedies of a secured party
under the Uniform Commercial Code as adopted by the State of Florida with
respect to such property, including, without limitation the right to sell or
otherwise dispose of any or all of such property. The Bank may, without further
notice to anyone, apply or set off any balances, credits, deposits, accounts,
monies or other indebtedness at any time created by or due from the Bank to the
Guarantor against the amounts due hereunder. Any notification of intended
disposition of any property required by law shall be deemed reasonable and
properly given if given at least five (5) calendar days before such
disposition.
14. The Guarantor represents and warrants to the Bank that:
(a) The Guarantor: (i) is duly organized, validly
existing and in good standing under the laws of the state or country of its
incorporation and in all other states where the nature and extent of the
business transacted by it or the ownership of its assets makes such
qualification necessary (except where the failure to be so qualified would not
have a material adverse effect on the Guarantor); (ii) has the corporate power
and authority to own its properties and to carry on its business as now being
conducted; (iii) to the extent necessary, is qualified to do
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business in the State of Florida; (iv) is in compliance in all material
respects with all laws, orders, regulations, authorizations and similar matters
(collectively the "Governmental Requirements") of all governmental authorities,
whether federal, state, county, or municipal (collectively the "Governmental
Authority") applicable to it, except where the failure to be in compliance will
not have a material adverse effect on the Guarantor; (v) represents that all of
its issued and outstanding stock is fully paid and nonassessable, there are no
outstanding rights or options to acquire any additional stock, and its stock
has not been pledged or encumbered in any manner whatsoever; and (vi) has not
amended or modified its articles of incorporation or its bylaws except as
previously disclosed in writing to the Bank prior to the execution hereof.
(b) The execution, delivery and performance by the
Guarantor of this Guaranty: (i) is within the corporate powers and purposes of
the Guarantor; (ii) has been duly authorized by all requisite corporate action
of the Guarantor; (iii) does not require the approval of any Governmental
Authority; and (iv) will not violate any material Governmental Requirement, the
articles of incorporation and bylaws of the Guarantor or any material
indenture, agreement or other instrument to which the Guarantor is a party or
by which it or any of its property is bound, or be in conflict with, result in
a breach of or constitute (with due notice or the lapse of time, or both) a
default under any such material indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of its property or assets, except as contemplated by
the provisions of this Guaranty.
(c) This Guaranty when executed and delivered by the
Guarantor will constitute the legal, valid and binding obligation of the
Guarantor enforceable in accordance with the terms hereof
(d) Except as previously disclosed by the Guarantor to
the Bank in writing, there are no judgments outstanding against the Guarantor
and there is no action, suit, proceeding, or investigation now pending (or to
the best of the Guarantor's knowledge after diligent inquiry threatened)
against, involving or affecting the Guarantor or any of its properties or any
part thereof, at law, in equity or before; any Governmental Authority that if
adversely determined as to the Guarantor, would result in a material adverse
change in the business or financial condition of the Guarantor, or the
Guarantor's operation and ownership of any of its properties, nor to the
Guarantor's best knowledge is there any basis for such action, suit,
proceeding, or investigation.
(e) The Guarantor is not insolvent and will not be
rendered insolvent by the execution, delivery, payment and
performance of this Guaranty.
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(f) Until the Obligations have been paid and performed
in full and the Guarantor shall have performed all of its obligations
hereunder, the Guarantor shall not, directly or indirectly, sell, convey, or
transfer or permit to be sold, conveyed, or transferred any of its assets to
any party or entity to which the Guarantor is related or in which the Guarantor
has an interest except on arm's-length terms for fair value in the ordinary
course of business and excePt as otherwise permitted in the Loan Agreement.
15. The Guarantor acknowledges that the Bank has relied upon the
Guarantor's representations, has made no independent investigation of the truth
thereof and is not charged with any knowledge contrary thereto that may have
been received by any officer, director, employee, or shareholder of the Bank.
The Guarantor further acknowledges that it has not been induced to execute and
deliver this Guaranty as a result of, and is not relying upon, any
representations, warranties, agreements, or conditions, whether express or
implied, written or oral, by the Bank or by any officer, director, employee, or
shareholder of the Bank.
16. The Guarantor agrees that there shall be no material change (a
material change is agreed to be more than 25%) in the ownership or control of
the Guarantor without the prior express written consent of the Bank.
17. Notwithstanding anything to the contrary contained in this
Guaranty or in the Note or the Loan Documents, the parties intend that any
interest for which the Guarantor is obligated hereunder shall not exceed the
maximum amount of interest permitted to be enforced against the Guarantor under
the applicable laws relating to usury.
18. The Guarantor agrees that this Agreement shall be governed by
the substantive law of the State of Florida, without regard to principles of
conflicts of laws.
19. Without in any way limiting the foregoing, the Guarantor hereby
waives any other act or omission of the Bank which may change the scope of the
Guarantor's risk.
20. All communications, notices or demands provided for hereunder
shall be sent by first class mail, by courier, by hand or by certified mail as
follows or to such other address with respect to any party as such party shall
notify the others in writing:
To the Bank: Barnett Bank, N.A.
50 North Laura Street
Jacksonville, Florida 32202
Attn: Corporate Banking Group
To the Guarantor: ____________________________
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191 Nassau Place Road
Yulee, Florida 32097
Attn: President
With a copy to:
Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attn: Robert L. Lawrence, Esq.
Each such communication, notice or demand shall be deemed given: (i) when
deposited in the mail with proper postage affixed if sent by mail; or (ii) when
actually delivered to the appropriate address if sent by courier or by hand.
21. This Agreement shall inure to the benefit of the Bank, its
successors and assigns, and to any person to whom the Bank may grant an
interest in any of the Obligations, and shall be binding upon the Guarantor and
its respective successors and assigns. This Agreement shall not be modified
except by instrument in writing signed by Guarantor and the Bank. No waiver by
the Bank of any term hereof shall be valid unless the Bank has executed a
written waiver of such term
22. This Agreement is intended to take effect as a document under
seal.
23. Notwithstanding any contrary provision set forth herein, the
liability of the Guarantor with respect to the Obligations shall not exceed at
any time the Maximum Amount (as defined herein). The "Maximum Amount" shall
mean the greater of:
(a) the aggregate amount of all advances to the
Guarantor made directly or indirectly with the proceeds of the
Note or other Loan Documents; or
(b) 95% of: (i) the fair salable value of the assets of the
Guarantor as of the date hereof; minus (ii) the total liabilities of the
Guarantor (including contingent liabilities, but excluding liabilities of the
Guarantor under this Guaranty and the other Loan Documents executed by the
Guarantor) as of the date hereof (except, however, that if the calculation of
the Maximum Amount in the manner provided in this subparagraph (b) as of the
date payment is required of the Guarantor pursuant to this Guaranty would
result in a greater positive number, then the Maximum Amount shall be deemed to
be such greater positive number).
IN WITNESS WHEREOF, the Guarantor, intending to be legally bound
hereby, has duly executed this Guaranty of Payment on or as of the date and
year first above written.
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[GUARANTOR]
By: _____________________
Its: _________________
(Corporate Seal)
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STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this ______ day of November, 1996, by ___________ the _______________
of _______________________, on behalf of the corporation, in Camden County,
Georgia.
Notary Public, State and County
aforesaid
Print Name:____________________
My Commission Expires:
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