<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
[AMENDMENT NO.........]
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
ARMOR HOLDINGS, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|_| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
----------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:_______________________________________
2) Form Schedule or Registration Statement No.:__________________
3) Filing Party:_________________________________________________
4) Date Filed:___________________________________________________
<PAGE>
April 30, 1997
To Our Stockholders:
On behalf of your Company's Board of Directors, I cordially
invite you to attend the Annual Meeting of Stockholders to be held on June 12,
1997, at 10:00 A.M., New York City time, at The Metropolitan Club, 1 East 60th
Street, New York, New York 10022.
The accompanying Notice of Meeting and Proxy Statement cover
the details of the matters to be presented.
A copy of the 1996 Annual Report is included with this
mailing.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING,
I URGE THAT YOU PARTICIPATE BY COMPLETING AND RETURNING YOUR
PROXY AS SOON AS POSSIBLE. YOUR VOTE IS IMPORTANT AND WILL BE
GREATLY APPRECIATED. YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON IF YOU DECIDE TO ATTEND THE MEETING.
Cordially,
ARMOR HOLDINGS, INC.
Jonathan M. Spiller
President and
Chief Executive Officer
JMS/ksh
<PAGE>
ARMOR HOLDINGS, INC.
13386 INTERNATIONAL PARKWAY
JACKSONVILLE, FLORIDA 32218
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 1997
To Our Stockholders:
The Annual Meeting of Stockholders of Armor Holdings, Inc., a
Delaware corporation (the "Company"), will be held on Thursday, June 12, 1997,
at The Metropolitan Club, 1 East 60th Street, New York, New York 10022, at
10:00 A.M., New York City time, or any adjournment or postponement thereof (the
"Meeting"), for the following purposes:
1. To elect a Board of seven Directors, to serve until the
next annual meeting of stockholders and until their successors are duly elected
and qualified (Proposal 1);.
2. To consider and vote upon a proposal pursuant to which the
Company will become a holding company and own the capital stock of its
subsidiary corporations, through which the operations of the Company will be
conducted. As part of such proposal, all of the businesses, assets, liabilities
and operations of the Company will be transferred to a wholly-owned subsidiary
corporation pursuant to appropriate assignment and assumption agreements in
order to implement such holding company structure (Proposal 2);
3. To consider and vote upon a proposal to approve an
amendment to the Company's 1996 Non-Employee Directors Stock Option Plan to
increase by 150,000 shares, the total number of shares of the Company's common
stock, $.01 par value per share, that may be awarded under such plan (Proposal
3);
4. To consider and vote upon a proposal to approve an
amendment to the Company's 1996 Stock Option Plan to increase by 250,000
shares, the total number of shares of the Company's common stock, $.01 par
value per share, that may be awarded under such plan (Proposal 4);
5. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending December 27, 1997
(Proposal 5); and
6. To transact such other business as may properly be brought
before the Meeting.
Only stockholders of record at the close of business on April
28, 1997 shall be entitled to notice of and to vote at the Meeting. A copy of
the Annual Report for the fiscal year ended December 28, 1996 is being mailed
to stockholders simultaneously herewith.
<PAGE>
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON IF YOU DECIDE TO ATTEND THE MEETING.
Carol T. Burke
Secretary
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ARMOR HOLDINGS, INC.
13386 INTERNATIONAL PARKWAY
JACKSONVILLE, FLORIDA 32218
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 1997
---------
INTRODUCTION
PROXY SOLICITATION AND GENERAL INFORMATION
This Proxy Statement and the enclosed form of proxy (the
"Proxy Card") are being furnished to the holders of Common Stock, par value
$.01 per share (the "Common Stock"), of Armor Holdings, Inc., a Delaware
corporation (the "Company"), in connection with the solicitation of proxies by
the Board of Directors of the Company for use at the Annual Meeting of
Stockholders to be held on June 12, 1997, at The Metropolitan Club, 1 East 60th
Street, New York, New York 10022 at 10:00 A.M., New York City time, and at any
adjournment or postponement thereof (the "Meeting"). This Proxy Statement and
the Proxy Card are first being sent to stockholders on or about April 30, 1997.
At the Meeting, holders of Common Stock (the "Stockholders")
will be asked:
1. To elect a Board of seven Directors to serve until the
next annual meeting of stockholders and until their successors are duly elected
and qualified (Proposal 1);
2. To consider and vote upon a proposal pursuant to which the
Company will become a holding company and own the capital stock of its
subsidiary corporation, through which the operations of the Company will be
conducted. As part of such proposal, the assets and liabilities of the Company
will be transferred to a wholly-owned subsidiary corporation pursuant to
appropriate assignment and assumption agreements in order to implement such
holding company structure (Proposal 2);
3. To consider and vote upon a proposal to approve an
amendment to the Company's 1996 Non-Employee Directors Stock Option Plan to
increase by 150,000 shares, the total number of shares of the Company's Common
Stock that may be awarded under such plan (Proposal 3);
4. To consider and vote upon a proposal to approve an
amendment to the Company's 1996 Stock Option Plan to increase by 250,000
shares, the total number of shares of the Company's Common Stock that may be
awarded under such plan (Proposal 4);
<PAGE>
5. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending December 27, 1997
(Proposal 5); and
6. To transact such other business as may properly be brought
before the Meeting.
The Board of Directors has fixed the close of business on
April 28, 1997, as the record date for the determination of Stockholders
entitled to notice of and to vote at the Meeting. Each such Stockholder will be
entitled to one vote for each share of Common Stock held on all matters to come
before the Meeting and may vote in person or by proxy authorized in writing.
Stockholders are requested to complete, sign, date and
promptly return the Proxy Card in the enclosed envelope. Common Stock
represented by properly executed proxies received by the Company and not
revoked will be voted at the Meeting in accordance with instructions contained
therein. If the Proxy Card is signed and returned without instructions, the
shares will be voted FOR the election of each nominee for director named herein
(Proposal 1) and FOR Proposals 2, 3, 4 and 5. A Stockholder who so desires may
revoke his proxy at any time before it is voted at the Meeting by delivering
written notice to the Company (attention: Corporate Secretary), by duly
executing a proxy bearing a later date or by casting a ballot at the Meeting.
Attendance at the Meeting will not in and of itself constitute a revocation of
a proxy.
The Board of Directors knows of no other matters that are to
be brought before the Meeting other than as set forth in the Notice of Meeting.
If any other matters properly come before the Meeting, the persons named in the
enclosed form of proxy or their substitutes will vote in accordance with their
best judgment on such matters.
THE MEETING
The Meeting will be held on Thursday, June 12, 1997, at 10:00
A.M., New York City time, at The Metropolitan Club, 1 East 60th Street, New
York, New York 10022.
RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE
Only Stockholders as of the close of business on April 28,
1997 (the "Record Date") are entitled to notice of and to vote at the Meeting.
As of the Record Date, there were 10,551,795 shares of Common Stock outstanding
and entitled to vote, with each share entitled to one vote. See "Security
Ownership of Certain Beneficial Owners and Management-Changes in Control."
REQUIRED VOTES
A plurality of the votes cast by the holders of shares of
Common Stock present in person or by proxy at the Meeting at which a quorum is
present is required for the election of a nominee for director. The approval
and adoption of Proposals 2, 3, 4 and 5 requires the
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<PAGE>
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock present or represented by proxy and voting at a stockholders
meeting at which a quorum is present. Abstentions and broker non-votes will
have the legal effect of a vote against Proposal 2. Abstentions will have the
legal effect of a vote against Proposals 3, 4 and 5. With respect to a broker
non-vote on Proposals 3, 4 and 5, such shares will not be considered present at
the Meeting and (since they will not be counted in respect of the matter) the
broker non-votes will have the practical effect of reducing the number of
affirmative votes required to achieve a majority vote for the matter by
reducing the total number of shares from which the majority is calculated.
The directors and officers of the Company (collectively
"Management") own, in the aggregate, approximately 48% of the outstanding
shares of the Company's Common Stock and have indicated their intention to vote
for each director nominee and for all other proposals described in this Proxy
Statement.
PROXY SOLICITATION
The Company will bear the costs of the solicitation of
proxies for the Meeting. In addition, directors, officers and employees of the
Company may solicit proxies from Stockholders by mail, telephone, telegram,
personal interview or otherwise. Such directors, officers and employees will
not receive additional compensation but may be reimbursed for out-of-pocket
expenses in connection with such solicitation. Brokers, nominees, fiduciaries
and other custodians have been requested to forward soliciting material to the
beneficial owners of Common Stock held of record by them and such custodians
will be reimbursed for their reasonable expenses.
INDEPENDENT ACCOUNTANTS
The Company has been advised that representatives of Deloitte
& Touche LLP, the Company's independent accountants for the fiscal year ended
December 28, 1996, the Company's most recently completed fiscal year ("Fiscal
1996"), will attend the Meeting, will have an opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions.
IT IS DESIRABLE THAT AS LARGE A PROPORTION AS POSSIBLE OF THE STOCKHOLDERS'
INTERESTS BE REPRESENTED AT THE MEETING. THEREFORE, EVEN IF YOU INTEND TO BE
PRESENT AT THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY
TO INSURE THAT YOUR STOCK WILL BE REPRESENTED. IF YOU ARE PRESENT AT THE
MEETING AND DESIRE TO DO SO, YOU MAY WITHDRAW YOUR PROXY AND
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VOTE IN PERSON BY GIVING WRITTEN NOTICE TO THE SECRETARY OF THE
COMPANY. PLEASE RETURN YOUR EXECUTED PROXY PROMPTLY.
SECURITY OWNERSHIP
OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of
March 23, 1997, to the knowledge of the Company, regarding the beneficial
ownership of Common Stock, which is the Company's only class of outstanding
voting securities, by: (i) each Stockholder who owns more than 5% of the
outstanding Common Stock of the Company; (ii) each director; (iii) each of the
named executive officers of the Company; and (iv) all directors and executive
officers of the Company as a group. The information set forth in the table and
accompanying footnotes has been furnished by the named beneficial owners. Since
the table and accompanying footnotes reflect beneficial ownership determined
pursuant to the applicable rules of the Securities and Exchange Commission, the
information is not necessarily indicative of beneficial ownership for any other
purpose.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ---------------- -------------------- -----
Warren B. Kanders and
Kanders Florida Holdings, Inc. (1) 4,462,178 42.3%
c/o Armor Holdings, Inc.
13386 International Parkway
Jacksonville, FL 32218
Nevis Capital Management, Inc. (2)
1119 St. Paul Street 1,035,900 9.8%
Baltimore, MD 21202
Jonathan M. Spiller (3)
c/o Armor Holdings, Inc. 690,205 6.3%
13386 International Parkway
Jacksonville, FL 32218
Richmont Capital Partners I, L.P.(4)
430 Westgrove Drive 800,000 7.4%
Dallas, TX 75248
Burtt R. Ehrlich (5)
c/o Armor Holdings, Inc. 229,100 2.2%
13386 International Parkway
Jacksonville, FL 32218
4
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NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ---------------- -------------------- -----
Nicolas Sokolow (6)
c/o Armor Holdings, Inc. 150,000 1.4%
13386 International Parkway
Jacksonville, FL 32218
Richard T. Bistrong (7)
c/o Armor Holdings, Inc. 50,000 .47%
13386 International Parkway
Jacksonville, FL 32218
Thomas W. Strauss (8) 65,000 .61%
c/o Armor Holdings, Inc.
13386 International Parkway
Jacksonville, FL 32218
Carol T. Burke (9) 19,999 .19%
c/o Armor Holdings, Inc.
13386 International Parkway
Jacksonville, FL 32218
Alair A. Townsend (10)
c/o Armor Holdings, Inc. 5,516 .05%
13386 International Parkway
Jacksonville, FL 32218
Richard C. Bartlett (11)
c/o Armor Holdings, Inc. 0 0%
13386 International Parkway
Jacksonville, FL 32218
Robert R. Schiller (12) 0 0%
c/o Armor Holdings,Inc.
13386 International Parkway
Jacksonville, FL 32218
All executive officers and directors 5,671,998 50.7%
as a group (10 persons)(1)(3)(5)
(6)(7)(8)(9)(10)(11)(12)
- ---------
(1) Represents 4,133,037 shares owned by Kanders Florida Holdings, Inc.
("KFH"), which are deemed to be beneficially owned by Warren B.
Kanders because he is the sole stockholder and sole director of KFH.
Also includes 300,000 shares owned by the Kanders Florida Holdings,
Inc. 1996 Charitable Remainder Unitrust, of which Mr. Kanders is
trustee. Mr. Kanders disclaims beneficial ownership of the shares
owned by the trust. Of the shares listed, Mr. Kanders owns 29,141
shares individually.
(2) Nevis Capital Management, Inc. ("Nevis") is the general partner of
Snowden Limited Partnership ("Snowden"). All of the shares deemed to
be beneficially owned by Nevis are registered in the name of Snowden.
(3) Includes 432,000 stock options granted to Mr. Spiller under the terms
of his previous employment agreement, which was executed on January 1,
1994 but which was mutually terminated by Mr. Spiller and the Company
and superseded by a new employment agreement executed on January 18,
1996, and 18,000 stock options granted to Mr. Spiller pursuant to the
Company's 1994 Incentive Stock Plan. Such options are fully vested but
unexercised. Also includes
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24,000 stock options awarded to Mr. Spiller on January 19, 1996. These
options are fully vested but unexercised. Also includes 43,541 shares
owned by Mr. Spiller's children, of which Mr. Spiller disclaims
beneficial ownership. Of the 690,205 shares listed, 646,664 are
subject to a three year lock-up agreement between Mr. Spiller and KFH.
Pursuant to the terms of a letter agreement, dated January 18, 1996
(the "Letter Agreement"), Mr. Spiller agreed that he will not,
directly or indirectly, without the prior written consent of KFH,
offer to sell, sell, grant any options for the sale of, assign,
transfer, pledge, hypothecate or otherwise encumber or dispose of such
shares of Common Stock of the Company or securities convertible into,
exercisable or exchangeable for or evidencing any right to purchase or
subscribe for, such shares of Common Stock of the Company or dispose
of any beneficial interest therein for a period of three years from
January 18, 1996, except as provided in such Letter Agreement. KFH and
Mr. Spiller entered into an agreement, dated as of January 18, 1996,
pursuant to which KFH granted a beneficial ownership interest in
316,823 shares of Common Stock of the Company owned by KFH. Such
agreement provides that, in the event that KFH sells at least 452,604
shares of Common Stock of the Company in a single transaction, then
Mr. Spiller shall have the option to either (i) pay to KFH an amount
equal to the Spiller Acquisition Cost (as defined in such agreement),
in which event Mr. Spiller will be entitled to receive stock
certificates representing such 316,823 shares of Common Stock, or (ii)
receive the net proceeds relating to 316,823 shares of Common Stock
that are the subject of the sale by KFH, reduced by the Spiller
Acquisition Cost relating to such shares of Common Stock so sold by
KFH. In the event that KFH does not sell at least 452,604 shares of
Common Stock as described above, then Mr. Spiller's rights to the
316,823 shares of Common Stock shall vest on January 18, 1999;
provided, however, that, at such time, Mr. Spiller is the President
and Chief Executive Officer of the Company and his Employment
Agreement with the Company, dated as of January 18, 1996, is in full
force and effect and Mr. Spiller is not in breach thereof; and,
provided, further, that if Mr. Spiller's Employment Agreement with the
Company is terminated due to his death or disability, or without
cause, prior to January 18, 1999, then a pro-rata portion of such
316,823 shares of Common Stock, based upon the number of months
elapsed from January 18, 1996 in relation to 36 months, shall vest to
Mr. Spiller. Unless sooner acquired by Mr. Spiller as hereinabove
described, Mr. Spiller shall have the right to acquire any such vested
shares of Common Stock pursuant to such agreement on January 18, 2001
upon payment by Spiller to KFH of the Spiller Acquisition Cost
relating to such shares.
(4) Includes 200,000 stock options granted to Richmont Capital Partners I,
L.P. ("Richmont") which are fully vested but unexercised pursuant to
that certain option granted by the Company to Richmont dated May 15,
1996 (the "Richmont Option"), entitling Richmont to purchase up to
300,000 shares of Common Stock. Of the 300,000 options granted,
200,000 are fully vested but unexercised, and 100,000 become fully
vested on May 15, 1998. The Richmont Option expires after 5:00 P.M.,
Eastern Time, on May 15, 2006.
(5) Includes 13,400 shares owned by Mr. Ehrlich's children and 20,600 held
in trust for the benefit of his children, of which Mr. Ehrlich's
spouse is trustee, of which he disclaims beneficial ownership. Also
includes 400 shares owned by Mr. Ehrlich's spouse's individual
retirement account, of which Mr. Ehrlich disclaims beneficial
ownership. Also includes 25,000 stock options granted to Mr. Ehrlich
under the terms of the 1996 Non-Employee Directors Stock Option Plan
(the "1996 Directors Plan") at an exercise price of $3.75 per share.
Such options were granted to Mr. Ehrlich as part of a grant of 75,000
stock options pursuant to the terms of the 1996 Directors Plan upon
his initial election to the Board of Directors on January 18, 1996, at
an exercise price of $3.75 per share, the closing trading price of the
Company's Common Stock on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), on January 18, 1996.
Such options vest in three equal annual installments on January 18,
1997, 1998 and 1999. Of the 229,100 shares listed, 100,000 shares are
subject to a three year lock-up agreement between Mr. Ehrlich and KFH
(the "Ehrlich Lock-Up"). Pursuant to the Ehrlich Lock-Up, Mr. Ehrlich
agreed that he will not, directly or indirectly, without the prior
written consent of KFH, offer to sell, sell, grant any options for the
sale of, assign, transfer, pledge, hypothecate or otherwise encumber
or dispose of any shares of Common Stock of the Company or securities
convertible into, exercisable or exchangeable for or evidencing any
right to purchase or subscribe for any shares of Common Stock of the
Company or dispose of any beneficial interest therein for a period of
three years from January 18, 1996, except as provided in such
agreement.
(6) Includes 100,000 shares owned by S.T. Investors Fund, LLC ("STIF"), a
limited liability company of which Mr. Sokolow is a member and 20,000
shares owned by Mr. Sokolow's children, of which he disclaims
beneficial ownership. Also includes 5,000 shares owned by Mr.
Sokolow's profit sharing plan. Also includes 25,000 stock options
granted to Mr. Sokolow under the terms of the 1996 Directors Plan at
an exercise price of $3.75 per share. Such options were granted to Mr.
Sokolow as part of a grant of 75,000 stock options pursuant to the
terms of the 1996 Directors Plan upon his initial election to the
Board of Directors on January 18, 1996, at an exercise price of $3.75
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per share, the closing trading price of the Company's Common Stock on
NASDAQ, on January 18, 1996. Such options vest in three equal annual
installments on January 18, 1997, 1998 and 1999. Of the 150,000 shares
listed, 100,000 shares are subject to a three year lock-up agreement
between STIF and KFH (the "STIF Lock-Up"). Pursuant to the STIF
Lock-Up, STIF agreed that it will not, directly or indirectly, without
the prior written consent of KFH, offer to sell, sell, grant any
options for the sale of, assign, transfer, pledge, hypothecate or
otherwise encumber or dispose of any shares of Common Stock of the
Company or securities convertible into, exercisable or exchangeable
for or evidencing any right to purchase or subscribe for any shares of
Common Stock of the Company or dispose of any beneficial interest
therein for a period of three years from January 18, 1996, except as
provided in such agreement.
(7) Includes 50,000 stock options granted to Mr. Bistrong under the terms
of his previous employment agreement, which was executed on February
5, 1995 but which was mutually terminated by Mr. Bistrong and the
Company and superseded by a new employment agreement executed on
January 18, 1996. Such options are fully vested but unexercised.
All of the shares listed are subject to a three year lock-up agreement
between Mr. Bistrong and KFH (the "Bistrong Lock-Up"). Pursuant to the
Bistrong Lock-Up, Mr. Bistrong agreed that he will not, directly or
indirectly, without the prior written consent of KFH, offer to sell,
sell, grant any options for the sale of, assign, transfer, pledge,
hypothecate or otherwise encumber or dispose of any shares of Common
Stock of the Company or securities convertible into, exercisable or
exchangeable for or evidencing any right to purchase or subscribe for
any shares of Common Stock of the Company or dispose of any beneficial
interest therein for a period of three years from January 18, 1996,
except as provided in such agreement.
(8) Includes 25,000 stock options granted to Mr. Strauss under the terms
of the 1996 Directors Plan at an exercise price of $7.50 per share.
Such options were granted to Mr. Strauss as part of a grant of 75,000
stock options pursuant to the terms of the 1996 Directors Plan upon
his initial election to the Board of Directors on May 13, 1996, at an
exercise price of $7.50 per share, the closing trading price of the
Company's Common Stock on the American Stock Exchange on May 13, 1996.
Such options vest in three equal annual installments on May 13, 1997,
1998 and 1999.
(9) The number of shares listed are pursuant to vested but unexercised
stock options granted to Ms. Burke under the terms of the Company's
1994 Incentive Stock Plan at an exercise price of $.97 per share, the
fair market value of the Common Stock on the date of the grant. All of
the shares listed are subject to a three year lock-up agreement
between Ms. Burke and KFH (the "Burke Lock-Up"). Pursuant to the Burke
Lock-Up, Ms. Burke agreed that she will not, directly or indirectly,
without the prior written consent of KFH, offer to sell, sell, grant
any options for the sale of, assign, transfer, pledge, hypothecate or
otherwise encumber or dispose of any shares of Common Stock of the
Company or securities convertible into, exercisable or exchangeable
for or evidencing any right to purchase or subscribe for any shares of
Common Stock of the Company or dispose of any beneficial interest
therein for a period of three years from January 18, 1996, except as
provided in such agreement.
(10) Excludes 75,000 stock options granted to Ms. Townsend under the terms
of the 1996 Directors Plan. Such options were granted to Ms. Townsend
upon her initial election to the Board of Directors on December 9,
1996 at an exercise price of $8.00 per share, the closing trading
price of the Company's Common Stock on the American Stock Exchange on
December 9, 1996. Such options vest in three equal annual installments
on December 9, 1997, 1998 and 1999.
(11) Mr. Bartlett does not own any shares individually. Mr. Bartlett is
Chairman of the Board of Directors of The Richmont Group, whose
subsidiary, Richmont, is the beneficial owner of 800,000 shares of
Common Stock. Mr. Bartlett disclaims beneficial ownership of the
shares owned by Richmont.
(12) Mr. Schiller does not own any shares individually. Pursuant to the
terms of his employment agreement, Mr. Schiller was granted options to
purchase 150,000 shares of Common Stock on July 24, 1996 under the
Company's 1996 Stock Option Plan at an exercise price of $6.06 per
share, the market price of the Common Stock on the date of the grant.
The options vest over a period of three years from the date of the
grant, and all options become exercisable on July 24, 1999.
7
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CHANGES IN CONTROL
On January 18, 1996, the Company underwent a change in
control in connection with the purchase by Kanders Florida Holdings, Inc.
("KFH") and certain other investors (the "Investors") of all of the capital
stock of the Company (the "Purchase") owned by Clark Schwebel, Inc. ("Clark
Schwebel"), a supplier of raw materials to the Company, and Hexcel Corporation
("Hexcel"). See "Certain Relationships and Related Transactions- Transactions
With Management and Others" for a discussion of the Company's transactions with
Clark Schwebel. Prior to the closing of the Purchase (the "Closing"), at a
meeting held on January 18, 1996, the then existing Board of Directors, which
consisted of Jonathan M. Spiller, Julius Lasnick, Gardner F. Davis, John Innes
and Robert Sullivan, authorized the officers of the Company to take such
actions as the officers deemed necessary, prudent and appropriate to facilitate
the Purchase by KFH and the Investors. Following such action, Messrs. Lasnick,
Davis, Innes and Sullivan conditionally resigned from the Board of Directors,
effective upon the Closing. Such resignations were conditioned upon the
occurrence of the Closing. Contemporaneously with the tendering by Messrs.
Lasnick, Davis, Innes and Sullivan of their conditional resignations, the Board
of Directors appointed Warren B. Kanders, who was elected Chairman of the Board
of Directors, Burtt R. Ehrlich and Nicolas Sokolow to the vacancies to be
created by such resignations. Mr. Kanders is the sole stockholder and sole
director of KFH. Upon assuming office, Messrs. Kanders, Ehrlich and Sokolow
constituted a majority of the Board of Directors. The Board of Directors was
expanded twice during 1996 to add a total of three additional directors. On May
13, 1996, Thomas W. Strauss and Richard C. Bartlett were elected to serve as
members of the Board of Directors, and on December 9, 1996, Alair A. Townsend
was elected to the Board.
The shares of capital stock of the Company acquired by KFH
were paid for out of KFH's working capital funds. KFH acquired an aggregate of
2,880,217 shares of the Company's common stock, which at the time of the
Purchase had a par value of $.03 per share, and an aggregate of 1,131,075
shares of the Company's 3% Convertible, $1.00 stated value Preferred Stock (the
"Old Preferred Stock"), for an aggregate purchase price of $3,190,000, of which
an aggregate of $2,340,000 was paid in cash. The remaining $850,000 of the
purchase price was paid by promissory notes. To secure the payment of the
promissory notes, KFH pledged to Springs Industries, Inc., the parent
corporation of Clark Schwebel, 900,000 shares of the Company's common stock. In
addition, Mr, Kanders individually acquired 28,141 shares of the Company's
common stock. Mr. Kanders acquired an additional 1,000 shares of common stock
upon the listing of the Company's common stock on the American Stock Exchange
on March 18, 1996.
Upon assuming their positions, the newly constituted Board of
Directors of the Company elected to require the holders of the Company's Old
Preferred Stock to convert such shares to common stock at 110% of the aggregate
stated value of the Old Preferred Stock, at a conversion price of $.77 per
share (fair market value as determined by an independent valuation firm), as
required by the Company's then-effective Florida Amended and Restated Articles
of
8
<PAGE>
Incorporation. All shares of the Company's Old Preferred Stock were deemed to
have been converted upon such election by the Board of Directors.
Following the Closing, and assuming the conversion of the
shares of Old Preferred Stock owned by KFH, KFH and Mr. Kanders collectively
owned 4,524,178 of the total outstanding shares of common stock of the Company,
which at the time constituted approximately 66.4% of the total outstanding
shares of common stock of the Company.
As of the Record Date, KFH and Mr. Kanders collectively owned
4,462,178 of the total outstanding shares of Common Stock of the Company, which
holdings constitute approximately 42.3% of the total outstanding shares of
Common Stock of the Company. Management of the Company owns, in the aggregate,
approximately 48% of the total outstanding shares of the Company's Common
Stock and have indicated their intention to vote for the election of each of
the nominees for director and the approval and adoption of each of the
Proposals presented in this Proxy Statement.
No further changes in control of the Company are
currently contemplated.
The Company is not aware of any material proceedings to which
any director, executive officer or affiliate of the Company or any security
holder, including any owner of record or beneficially of more than 5% of any
class of the Company's voting securities, is a party adverse to the Company or
has a material interest adverse to the Company.
The Company is not aware of any material pending legal
proceedings, other than ordinary routine litigation incidental to the business
of the Company, to which any director or officer of the Company is a party or
of which any of their property is the subject.
PROPOSAL 1
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company provides that
there shall be three to fifteen directors, with such number to be fixed by the
Board of Directors. Effective at the time and for the purposes of the Meeting,
the number of directors of the Company, as fixed by the Board of Directors
pursuant to the Bylaws of the Company, is seven.
Unless otherwise specified, each proxy received will be voted
for the election as directors of the seven nominees named below to serve until
the 1998 Annual Meeting of Stockholders and until their successors shall be
duly elected and qualified. Each of the nominees has consented to be named a
nominee in the Proxy Statement and to serve as a director if elected. Should
any nominee become unable or unwilling to accept a nomination or election, the
persons named in the enclosed proxy will vote for the election of a nominee
designated by
9
<PAGE>
the Board of Directors or will vote for such lesser number of directors as may
be prescribed by the Board of Directors in accordance with the Company's
Bylaws.
The following persons have been nominated as directors:
POSITIONS DIRECTOR
NAME AGE AND OFFICE SINCE
- ---- --- ---------- -----
Warren B. Kanders (1)(2)(3)(4) 39 Chairman of the Board of 1996
Directors
Jonathan M. Spiller 45 Director, Chief Executive 1991
Officer and President
Burtt R. Ehrlich (1)(2) 57 Director 1996
Nicolas Sokolow (1)(2)(3) 46 Director 1996
Thomas W. Strauss(1) 54 Director 1996
Richard C. Bartlett(3)(4) 61 Director 1996
Alair A. Townsend 55 Director 1996
(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Member of Nominating Committee
(4) Member of Option Committee
Directors of the Company are elected annually at the annual
meeting of stockholders. Their respective terms of office continue until the
next annual meeting of stockholders and until their successors have been
elected and qualified in accordance with the Company's Bylaws. There are no
family relationships among any of the directors or executive officers of the
Company.
WARREN B. KANDERS
Warren B. Kanders was elected Chairman of the Board of
Directors on January 18, 1996. Mr. Kanders also served as Vice Chairman of the
Board of Directors of Benson Eyecare Corporation, a New York Stock Exchange
listed company, from October 1992 to May 3, 1996. Mr. Kanders was the President
and a Director of Pembridge Holdings, Inc. from June 1992 to March 1993. Since
1990, Mr. Kanders has been President of Kanders and Company, Inc., an
investment management company. From 1987 to 1990, Mr. Kanders was the founder
and Managing Director of Great Pacific Capital, Inc., which provided investment
management advice to the Jim Pattison Group, one of Canada's largest
privately-owned companies. From 1983 to 1987, Mr. Kanders was Vice President
and Director of U.S. Mergers and Acquisitions for Orion Royal Bank Limited, a
merchant bank wholly-owned by the Royal Bank of Canada. Mr. Kanders also serves
as Trustee and Chairman of the Investment
10
<PAGE>
Committee of Choate Rosemary Hall School, Wallingford, Connecticut. Mr. Kanders
received a B.A. degree in Economics from Brown University.
JONATHAN M. SPILLER
Jonathan M. Spiller has been a Director of the Company since
July 1991 and is the Company's President and Chief Executive Officer. Mr.
Spiller became President of the Company in June 1991, and has served as its
Chief Executive Officer since September 21, 1993. Mr. Spiller formerly served
as the Company's Chief Operating Officer from June 1991 to September 1993, when
he was named Chief Executive Officer. Mr. Spiller is a certified public
accountant and was previously a partner in the international accounting firm of
Deloitte & Touche LLP, where he spent a total of eighteen years, most recently
as a partner in the Capital Markets Group, where he was responsible for
international transactions. From March 1988 to July 1989, Mr. Spiller was the
Senior Vice President and Chief Financial Officer of Hunter Environmental
Services, Inc., a large publicly held company in the environmental field. Mr.
Spiller received a B.S. degree in Economics from the University of Wales and is
a Fellow of the Institute of Chartered Accountants in England and Wales. For
additional information concerning Mr. Spiller, See "Information Concerning
Meetings of the Board of Directors and Board Committees and Director
Compensation-Involvement in Certain Legal Proceedings."
BURTT R. EHRLICH
Burtt R. Ehrlich was elected a Director of the Company on
January 18, 1996. Mr. Ehrlich previously served as a Director of Benson Eyecare
Corporation, a New York Stock Exchange listed company, from its inception in
1986 to 1995, and as its Chairman and Chief Operating Officer from 1986 until
October 1992. Mr. Ehrlich is a Trustee of the Reserve Private Equity Series of
mutual funds and a Director of the Cater Allen family of mutual funds in the
United Kingdom. He is also a former Treasurer and Trustee of the Carnegie
Council on Ethics and International Affairs, and a former Trustee of the
Buckingham Browne and Nichols School. Mr. Ehrlich received a B.A. degree from
Columbia College and an M.B.A. from Columbia University Graduate School of
Business.
NICOLAS SOKOLOW
Nicolas Sokolow was elected a Director of the Company on
January 18, 1996. Mr. Sokolow is a senior partner in the law firm of Sokolow,
Dunaud, Mercadier & Carreras. From June 1973 until October 1994, Mr. Sokolow
was an associate and partner with the international law firm of Coudert
Brothers. Mr. Sokolow is also a Director of Rexel, Inc., a New York Stock
Exchange listed company. Mr. Sokolow, who is a member of the Paris Bar,
received his education from the Paris School of Law, Institute of Political
Sciences-Business Administration and the University of Michigan.
11
<PAGE>
THOMAS W. STRAUSS
Thomas W. Strauss was elected a Director of the Company on
May 13, 1996. Mr. Strauss is a Principal with Ramius Capital Group, a privately
held investment management firm. Prior to joining Ramius Capital, Mr. Strauss
was Co-Chairman of Granite Capital International Group.
From 1963 to 1991, Mr. Strauss was with Salomon Brothers Inc.
He was admitted as a General Partner in 1972 and was appointed to the Executive
Committee in 1981. In 1986, Mr. Strauss became President of Salomon Brothers
Inc ("Salomon") and a Vice Chairman and member of the Board of Directors of
Salomon Inc., the holding company of Salomon, and Phibro Energy, Inc. As
President of Salomon, he had a special focus on the International Investment
Banking and High Yield activities of the firm. Prior to becoming President of
Salomon, he was responsible for the U.S. Government, Money Market and Foreign
Exchange Departments.
Mr. Strauss is a former member of the Boards of Governors of
the American Stock Exchange, the Chicago Mercantile Exchange, the Public
Securities Association, the Securities Industry Association and a former member
of the U.S. Japan Business-Council. He is a past President of the Association
of Primary Dealers in U.S. Government Securities.
Mr. Strauss currently serves as a member of the Boards of
Trustees of The Mount Sinai Medical Center, Riverdale Country School, the Board
of Overseers of the School of Arts & Sciences of the University of
Pennsylvania, the Advisory Board of Randall's Island Sports Foundation and The
Corporation of the Hurricane Island Outward Bound School. Mr. Strauss received
a B.A. degree in Economics from the University of Pennsylvania. For additional
information concerning Mr. Strauss, See "Information Concerning Meetings of the
Board of Directors and Board Committees and Director Compensation-Involvement
in Certain Legal Proceedings."
RICHARD C. BARTLETT
Richard C. Bartlett was elected a Director of the Company on
May 13, 1996. Mr. Bartlett is the Vice Chairman of Mary Kay Holding Corporation
and the Chairman of The Richmont Group. Prior to being named Vice Chairman of
Mary Kay Holding Corporation in January 1993, Mr. Bartlett served as President
and Chief Operating Officer of Mary Kay Inc. from 1987 through 1992. Mr.
Bartlett joined Mary Kay in 1973 and became an officer in 1976. He has served
on the Board of Directors of Mary Kay Inc. from 1979 to 1995.
Prior to being named Chairman of the Board of The Richmont
Group in 1995, Mr. Bartlett served as Chief Executive Officer from 1994 to
1995. The Richmont Group is a holding company comprised of six companies doing
business in seven countries. The Richmont companies' portfolio businesses
includes, but is not limited to, financial services, apparel, sporting goods
and restaurant chains.
12
<PAGE>
Mr. Bartlett is a former Chairman of the U.S. Direct Selling
Education Foundation ("US DSEF") and the U.S. Direct Selling Association. He
currently serves on the Boards of Directors of both organizations, as well as
on the executive committee of the US DSEF. Mr. Bartlett is Chairman and a
Trustee of The Nature Conservancy of Texas. He also serves on the Board of the
Better Business Bureau of Metropolitan Dallas, Inc., and is a member of the
World Economic Forum, the National Center for Policy Analysis, The Conference
Board and the Academy of Marketing Science. He also serves on the advisory
boards of the Positive Employee Practices Institute, the Center for Retailing
Studies at Texas A&M University, the Center for Retailing Education and
Research at the College of Business Administration at the University of
Florida, the Department of Range, Wildlife, and Fisheries Management at Texas
Tech University, the advisory council of the University of Texas Press and the
global board of advisors for The Economist Group's Crossborder Monitor.
Mr. Bartlett received a B.S. degree in Communications from
the University of Florida, Gainesville.
ALAIR A. TOWNSEND
Alair A. Townsend was elected a Director of the Company on
December 9, 1996. Ms. Townsend became publisher of Crain's New York Business in
February 1989. Prior to joining Crain's New York Business, Ms. Townsend
served as New York City's Deputy Mayor for Finance and Economic Development
from February 1985 to January 1989.
Ms. Townsend is a Governor of the American Stock Exchange, a
former director of Fay's Inc., and a board member of Lincoln Center and the New
York City Partnership/Chamber of Commerce. She is chairman of the American
Woman's Economic Development Corporation and the Leadership Committee of the
Lincoln Center Consolidated Corporate Fund, and Vice Chairman of the Business
Council of New York State. She has been elected to the New York City
Partnership, and is a member of the Women's Forum and Advertising Women of New
York.
Ms. Townsend is a phi beta kappa graduate of Elmira College,
and holds a masters degree from the University of Wisconsin.
13
<PAGE>
VOTE REQUIRED
The nominees for directors who receive a plurality of the
votes cast by the holders of the outstanding Common Stock entitled to vote at
the Meeting at which a quorum is present will be elected to the Board of
Directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR each of the
above-named director nominees.
INFORMATION CONCERNING MEETINGS OF THE BOARD OF
DIRECTORS AND BOARD COMMITTEES AND DIRECTOR COMPENSATION
During Fiscal 1996, the Board of Directors held eight
meetings. The Board of Directors has standing Audit, Compensation, Nominating
and Option Committees. During Fiscal 1996, all of the directors then in office
attended at least 75% of the total number of meetings of the Board of Directors
and the Committees of the Board of Directors on which they served. The Audit,
Compensation, Nominating and Option Committees do not meet on a regular basis,
but only as circumstances require.
AUDIT COMMITTEE
The functions of the Audit Committee are to recommend to the
Board of Directors the appointment of independent auditors for the Company, to
analyze the reports and recommendations of such auditors and to review internal
audit procedures and controls. During Fiscal 1996, the Audit Committee met two
times. The Audit Committee currently consists of Messrs. Ehrlich (Chairman),
Kanders and Strauss.
COMPENSATION COMMITTEE
The purpose of the Compensation Committee is to recommend to
the Board of Directors the compensation and benefits of the Company's executive
officers and other key managerial personnel. During Fiscal 1996, the
Compensation Committee met two times. The Compensation Committee currently
consists of Messrs. Sokolow (Chairman) Kanders and Ehrlich.
NOMINATING COMMITTEE
The purpose of the Nominating Committee is to identify,
evaluate and nominate candidates for election to the Board of Directors. The
Nominating Committee will consider nominees recommended by Stockholders. The
names of such nominees should be forwarded to Carol T. Burke, Secretary, Armor
Holdings, Inc., 191 Nassau Place Road, Yulee, Florida 32097, who will submit
them to the committee for its consideration. During Fiscal
14
<PAGE>
1996, the Nominating Committee met one time. The Nominating Committee is
currently comprised of Messrs. Kanders (Chairman), Bartlett and Sokolow.
OPTION COMMITTEE
The purpose of the Option Committee is to administer the
Company's 1996 Stock Option Plan and 1996 Non-Employee Directors Stock Option
Plan, and to recommend to the Board of Directors awards of options to purchase
Common Stock of the Company thereunder. The Option Committee currently consists
of Messrs. Kanders (Chairman) and Bartlett, each of whom is a "disinterested
person" within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). During Fiscal 1996, the
Option Committee met two times.
COMPENSATION OF DIRECTORS
The non-employee directors of the Company participate in the
1996 Non- Employee Directors Stock Option Plan (the "1996 Directors Plan")
under which a grant of options covering 75,000 shares of Common Stock are
granted to each of the Company's non-employee directors on the date of their
initial election to the Board of Directors. Messrs. Kanders, Ehrlich, Sokolow,
Strauss, Bartlett and Ms. Townsend are all non-employee directors of the
Company. During 1996, each non-employee director, except for Messrs. Kanders
and Bartlett, was granted options to purchase 75,000 shares of Common Stock
upon their initial election to the Board of Directors at an exercise price per
share equal to the closing trading price of the Common Stock on the date of the
grant. Messrs. Kanders and Bartlett voluntarily renounced their eligibility to
participate in the 1996 Directors Plan. The options granted under the 1996
Directors Plan have a term of 10 years (but in no event more than three months
following the optionee's ceasing to serve as a member of the Company's Board of
Directors). One-third of the options granted under the 1996 Directors Plan
become exercisable on each anniversary of the grant date until all such options
are exercisable. No other compensation is or was paid to directors in 1996.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Except as hereinafter provided with respect to Messrs.
Strauss and Spiller, no director, director nominee, executive officer, promoter
or control person has, within the last five years: (i) had a bankruptcy
petition filed by or against any business of which such person was a general
partner or executive officer either at the time of the bankruptcy or within two
years prior to that time; (ii) been convicted in a criminal proceeding or is
currently subject to a pending criminal proceeding (excluding traffic
violations or similar misdemeanors); (iii) been subject to any order, judgment
or decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of business,
securities or banking activities; (iv) been found by a court of competent
jurisdiction (in a civil action), the Securities and Exchange Commission (the
"Commission") or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.
15
<PAGE>
On December 3, 1992, without admitting or denying any
liability, Mr. Strauss, a director nominee, consented to an order of the
Commission under which he was suspended from associating with any broker,
dealer, municipal securities dealer, investment company or investment advisor
for a period of six (6) months, and paid a civil penalty of $75,000. The
central claim in these proceedings was that as President of Salomon, Mr.
Strauss delayed in reporting an unauthorized bid by the head of Salomon's
Government Trading Desk who reported to one of Mr. Strauss' subordinates. Mr.
Strauss has maintained that he reported the unauthorized bid both to Salomon's
Chief Executive Officer and General Counsel immediately upon learning of the
unauthorized bid.
Mr. Spiller was employed by and served in a similar position
with the Company at the time the Company filed for Chapter 11 bankruptcy
protection in May 1992 through the confirmation on September 20, 1993 of the
Company's Third Amended and Restated Plan of Reorganization (the "Plan of
Reorganization") by the United States Bankruptcy Court, Middle District of
Florida, Jacksonville Division (the "Bankruptcy Court").
EXECUTIVE OFFICERS
Set forth below is certain information concerning the
Company's executive officers. Each of the persons identified below will
continue to serve in such capacity until the next meeting of the Board of
Directors appointing officers and until a successor is duly elected and
qualified. For biographical information concerning Mr. Spiller, see "Management
- - Directors."
EXECUTIVE
OFFICE
NAME AGE POSITION SINCE
- ---- --- -------- -----
Jonathan M. Spiller 45 President and Chief Executive 1991
Officer
Richard T. Bistrong 33 Vice President- 1995
Sales and Marketing
Carol T. Burke 35 Vice President-Finance and 1995
Secretary
Robert R. Schiller 34 Vice President-Corporate 1996
Development
RICHARD T. BISTRONG
Mr. Bistrong has been the Company's Vice President of Sales
and Marketing since February 1995, when he joined the Company. He is
responsible for managing and directing all efforts and activities of the
Company's domestic sales staff. Mr. Bistrong is also responsible for the
development and support of all distributor relationships. Prior to joining the
Company, Mr. Bistrong held the position of Director of Retail Operations for
Fechheimer Brothers Company, a wholly-owned subsidiary of Berkshire Hathaway,
for a period of two
16
<PAGE>
years. From 1986 to 1992, Mr. Bistrong was the Executive Vice President of
Point Blank Body Armor, where he was responsible for the domestic sales
organization. Mr. Bistrong has a B.A. degree in Political Science from the
University of Rochester and a Masters of Arts degree in Foreign Affairs from
the University of Virginia.
CAROL T. BURKE
Ms. Burke has been the Vice President of Finance of the
Company since January 1996 and its Secretary since March 4, 1996. Ms. Burke
joined the Company as Controller in January 1995. She oversees and directs all
treasury, budgeting and accounting activities for the Company. Ms. Burke is
also responsible for the analysis of general economic, business and financial
conditions and their impact on the Company's policies and operations. Ms.
Burke, who is a certified public accountant, previously spent over five years
with the Walt Disney organization as a Senior Finance Manager where she worked
in both Orlando and at the Euro Disney operation in France. Prior to that time,
Ms. Burke served as a Senior Auditor for Arthur Andersen & Co. Ms. Burke has a
B.S. degree in both Accounting and Management Science from the University of
South Carolina.
ROBERT R. SCHILLER
Mr. Schiller became the Company's Vice President of Corporate
Development in July 1996. He is responsible for assisting in the management of
the Company's acquisition program, related financing activities, and other
corporate projects. From 1994 to 1996, Mr.Schiller was a Principal in the
merchant banking firm of Circadian Capital Corporation and Director of
Corporate Finance for its affiliate, Jonathan Foster & Co. L.P., an NASD
registered broker-dealer, from 1993 to 1995. From January 1995 to September
1995, Mr. Schiller served as Chief Financial Officer of Troma, Inc., an
independent film studio. From 1991 to 1992, Mr. Schiller served as Vice
President of the Special Situation Investment Fund, an investment fund
controlled by the Brooke Group. From 1987 to 1989, Mr. Schiller was with
Canadian Imperial Bank of Commerce, most recently as Vice President,
Acquisition Finance. Mr. Schiller has a B.A. in Economics from Emory University
and an MBA from Harvard Business School.
17
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth all compensation, in excess of
$100,000, paid to the Company's Chief Executive Officer and the four other most
highly compensated executive officers of the Company for the fiscal years 1996,
1995 and 1994. The Company paid no compensation to its executive officers under
any long term compensation or retirement plans during the last three years. The
incremental cost of certain incidental personal benefits does not exceed the
lesser of $50,000 or 10% of compensation for any named executive officer of the
Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION (1)
AWARDS
Name and Principal All Other
Position Year Salary($) Bonus($) Options(#) Compensation($)
- -------- ---- --------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Jonathan M. Spiller 1996 160,000 60,000 24,000 5,775(2)
Chief Executive Officer and 1995 160,000 21,000 18,000 --
President 1994 140,000 62,000 432,000 --
Richard T. Bistrong 1996 120,000 107,000 50,000 --
Vice President- 1995 120,000 105,000 50,000 --
Sales and Marketing 1994 -- -- -- --
Robert R. Schiller 1996 44,210(3) 45,000 150,000 17,500(4)
Vice President- 1995 -- -- -- --
Corporate Development 1994 -- -- -- --
</TABLE>
- ---------
(1) The Company has no long term incentive compensation plan other than the
1994 Incentive Stock Option Plan and the 1996 Stock Option Plan and
various individually granted options. The Company does not award stock
appreciation rights, restricted stock awards or long term incentive
plan pay-outs.
(2) Represents the dollar value of 7,500 stock option grants awarded to Mr.
Spiller in December, 1995. They became fully vested on January 19,
1996.
(3) Mr. Schiller became an employee of the Company on July 24, 1996. He was
paid at an annual rate of salary of $120,000.
(4) Represents compensation earned by Mr. Schiller in his capacity as a
consultant to the Company prior to the execution of his employment
agreement.
OPTIONS GRANTED IN FISCAL 1996
The following information is furnished for the fiscal year
ended December 28, 1996 with respect to the Company's Chief Executive Officer
and each of the other executive officers of the Company for stock options
granted during such fiscal year. Stock options were granted without tandem
stock appreciation rights.
18
<PAGE>
Number of
Securities % of Total
Underlying Options Granted Exercise
Options to Employees in Price Per Expiration
Name Granted(#)(1) Fiscal Year Share ($/s) Date
- ---- ------------- ----------- ----------- ----
Jonathan M. Spiller 24,000 5.1% $1.00 1/19/2006
Richard T. Bistrong 50,000 10.7% $ .97 1/19/2006
Robert R. Schiller 150,000 32.1% $6.06 7/24/2006
Carol T. Burke 30,000 6.4% $ .97 1/19/2006
- ---------
(1) All options granted to such officers (except those granted to Mr.
Schiller) have a term of 10 years and were granted under the Company's
1994 Incentive Stock Option Plan. The options granted to Mr. Schiller
have a term of 10 years and were granted under the Company's 1996 Stock
Option Plan. The exercise price per share of such options was the market
value per share on the date of grant.
AGGREGATED OPTION EXERCISES IN FISCAL
1996 AND FISCAL YEAR END OPTION VALUES
The following information is furnished for the fiscal year
ended December 28, 1996 with respect to the Company's Chief Executive Officer
and each of the other executive officers of the Company for stock option
exercises during such fiscal year.
<TABLE>
<CAPTION>
Shares Acquired Value Number of Securities Underlying Value of Unexercised In-The-
NAME On Exercise(#) Realized($) Unexercised Options at 12/28/96 (#) Money Options at 12/28/96($)
- ---- -------------- -----------
Exercisable Non-Exercisable Exercisable Non-Exercisable
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jonathan M. Spiller 0 0 474,000 0 --- ---
Richard T. Bistrong 0 0 50,000 50,000 --- ---
Robert R. Schiller 0 0 0 150,000 --- ---
Carol T. Burke 0 0 19,999 25,001 --- ---
</TABLE>
EMPLOYMENT AGREEMENTS
Set forth below are descriptions of the Company's employment
agreements with Messrs. Spiller, Bistrong and Schiller. No employment agreement
has been entered into between Ms. Burke and the Company.
JONATHAN M. SPILLER
Mr. Spiller's employment agreement, dated as of January 18,
1996, provides that he will serve as the President and Chief Executive Officer
of the Company for an initial term expiring January 17, 1999, at a base salary
for 1996 of $160,000 per annum. Commencing January 1, 1997, pursuant to the
terms of his employment agreement, Mr. Spiller's base salary was increased to
$200,000 per annum. In addition to his base salary, Mr. Spiller shall also be
entitled to a yearly bonus during the term of his employment agreement. The
bonus shall be
19
<PAGE>
based upon the Company's earnings before interest and taxes. Mr. Spiller will
also be entitled, at the sole and absolute discretion of the Option Committee
of the Board of Directors, to participate in the Company's incentive stock plan
and other bonus plans adopted by the Company. Eligibility to participate in the
Company's incentive stock plan shall be based upon, among other things, the
performance of Mr. Spiller and the Company. As part of his compensation
package, the Company provides Mr. Spiller with other benefits commensurate with
his position, as more fully set forth in his employment agreement. Mr.
Spiller's employment with the Company shall continue, unless earlier terminated
by Mr. Spiller or due to Mr. Spiller's death or disability or by the Company,
for successive one year periods, on terms to be mutually agreed upon by the
Company and Mr. Spiller.
Of the 690,205 shares deemed to be beneficially owned by Mr.
Spiller, 646,664 are subject to a three year lock-up agreement between Mr.
Spiller and KFH. Pursuant to the terms of a letter agreement, dated January 18,
1996 (the "Letter Agreement"), Mr. Spiller agreed that he will not, directly
or indirectly, without the prior written consent of KFH, offer to sell, sell,
grant any options for the sale of, assign, transfer, pledge, hypothecate or
otherwise encumber or dispose of such shares of Common Stock of the Company or
securities convertible into, exercisable or exchangeable for or evidencing any
right to purchase or subscribe for, such shares of Common Stock of the Company
or dispose of any beneficial interest therein for a period of three years from
January 18, 1996, except as provided in such Letter Agreement.
RICHARD T. BISTRONG
Mr. Bistrong's employment agreement, dated as of January 18,
1996, provides that he will serve as Vice President-Sales and Marketing of the
Company for an initial term expiring January 17, 1999, at a base salary of
$120,000 per annum. Mr. Bistrong shall also be entitled to a yearly bonus
during the term of his employment agreement. In addition to his base salary
and bonus, Mr. Bistrong is entitled to receive non-qualified options to
purchase 21,250 shares of the Company's Common Stock and incentive stock
options to purchase 28,750 shares of the Company's Common Stock, in each case
at an exercise price of $.97 per share of Common Stock. These options are
exercisable for a period of eight years from the date of the grant, and all of
such options vest on January 18, 1999. The vesting of the options may be
accelerated on a pro rata basis in the event of the occurrence of certain
events. Pursuant to his employment agreement, Mr. Bistrong will also be
entitled, at the sole and absolute discretion of the Option Committee of the
Board of Directors, to participate in the Company's incentive stock plan and
other bonus plans adopted by the Company. Eligibility to participate in the
Company's incentive stock plan shall be based upon, among other things, the
performance of Mr. Bistrong and the Company. As part of his compensation
package, the Company provides Mr. Bistrong other benefits commensurate with his
position, as more fully set forth in his employment agreement. Mr. Bistrong's
employment with the Company shall continue, unless earlier terminated by Mr.
Bistrong or due to Mr. Bistrong's death or disability or by the Company, for
successive one year periods, on terms to be mutually agreed upon by the Company
and Mr. Bistrong.
Excluding the stock options granted to Mr. Bistrong pursuant
to the terms of his employment agreement, all of the shares underlying vested
but unexercised and unvested stock options owned by Mr. Bistrong are subject
to a three year lock-up agreement between Mr. Bistrong and KFH (the "Bistrong
Lock-Up"). Pursuant to the Bistrong Lock-Up, Mr. Bistrong agreed that he will
not, directly or indirectly, without the prior written consent of KFH, offer
to sell, sell, grant any options for the sale of, assign, transfer, pledge,
hypothecate or otherwise encumber or dispose of any shares of Common Stock of
the Company or securities convertible into, exercisable or exchangeable for
or evidencing any right to purchase or subscribe for any shares of Common
Stock of the Company or dispose of any beneficial interest therein for a period
of three years from January 18, 1996, except as provided in such agreement.
Mr. Bistrong owns no shares of Common Stock as of the date of this Proxy
Statement.
ROBERT R. SCHILLER
Mr. Schiller's employment agreement, dated as of July 24,
1996, provides that he will serve as Vice President-Corporate Development of
the Company for an initial term expiring July 23, 1999, at a base salary of
$120,000 per annum. Effective January 1, 1997, pursuant to the terms of his
employment agreement, Mr. Schiller's base salary was increased to $130,000
per annum. Mr. Schiller is also entitled to a one-time relocation bonus of
$45,000. In addition to his base salary, Mr. Schiller is entitled to receive
incentive stock options to purchase 150,000 shares of the Company's Common
Stock, in each case at an exercise price per share equal to $6.06, the market
price of the Common Stock on July 24, 1996, the date of the grant. These
options vest equally over a period of three years from the date of the grant,
and all of such options become exercisable on July 24, 1999. The vesting of the
options may be accelerated on a pro rata basis in the event of the occurrence
of certain events. Pursuant to his employment agreement, Mr. Schiller will also
be entitled, at the sole and absolute discretion of the Option Committee of the
Board of Directors, to participate
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<PAGE>
in the Company's incentive stock plan and other bonus plans adopted by the
Company. Eligibility to participate in the Company's incentive stock plan shall
be based upon, among other things, the performance of Mr. Schiller and the
Company. As part of his compensation package, the Company provides Mr.
Schiller's other benefits commensurate with his position, as more fully set
forth in his employment agreement. Mr. Schiller's employment with the Company
shall continue, unless earlier terminated by Mr. Schiller or due to Mr.
Schiller's death or disability or by the Company, for successive one year
periods, on terms to be mutually agreed upon by the Company and Mr. Schiller.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company has historically purchased substantially all of
the ballistic resistant fabric used in the manufacture of its products from
Clark Schwebel, a subsidiary of Springs and a former holder of 45.7% of the
Company's outstanding capital stock. KFH purchased all of the capital stock of
the Company owned by Clark Schwebel on January 18, 1996. The Company's
purchases from Clark Schwebel totalled approximately $5,000,000, $5,100,000 and
$3,400,000 in fiscal years 1996, 1995 and 1994, respectively, and were made in
the normal course of business at prices which the Company believes were
competitive with other available sources for such materials.
On May 15, 1996, the Company issued options to purchase
300,000 shares of the Company's Common Stock to Richmont at an exercise price
of $7.50 per share, subject to adjustment (the "Richmont Options"). The
Richmont Options and the underlying shares, whether vested or unvested, are
callable by the Company in the event that the closing price per share of the
Company's Common Stock is equal to or greater than $10 for a period of 10
consecutive trading days after December 31, 1997, upon written notice to
Richmont given within 30 days of the conclusion of such ten consecutive trading
days during which the closing price per share of the Company's Common Stock was
equal to or greater than $10. In such event, the Company may require Richmont
to exercise the Richmont Options in whole with respect to all such shares
within 10 days of such notice to Richmont. In the event that Richmont does not
exercise the Richmont Options, the Richmont Options will lapse and be of no
further force or effect.
Richmont was also the holder of $3,000,000 worth of the
Company's 5% Convertible Subordinated Notes (the "Notes"). Richmont converted
such Notes into 600,000 shares of Common Stock pursuant to the terms of that
certain Convertible Subordinated Note Purchase Agreement between the Company
and the purchasing parties thereto (the "Convertible Subordinated Note Purchase
Agreement") on December 18, 1996. Taking the 200,000 Richmont Options which
have fully vested and the shares into which the Notes were converted into
account, Richmont is the beneficial owner of 7.4% of the Company's outstanding
Common Stock. Richard C. Bartlett, a Director of the Company, is the Chairman
of the Board of
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Directors of the Richmont Group, the parent corporation of Richmont.
Mr. Bartlett disclaims beneficial ownership of any shares of Common Stock
beneficially owned by Richmont.
Burtt R. Ehrlich, a Director of the Company, was the holder
of $250,000 worth of Notes. Mr. Ehrlich converted such Notes into 50,000 shares
of Common Stock pursuant to the terms of the Convertible Subordinated Note
Purchase Agreement on December 18, 1996.
Thomas W. Strauss, a Director of the Company, was the holder
of $200,000 worth of Notes. Mr. Strauss converted such Notes into 40,000 shares
of Common Stock pursuant to the terms of the Convertible Subordinated Note
Purchase Agreement on December 18, 1996.
Alan Kanders, Beatrice Kanders and Emily Kanders, siblings of
Warren B. Kanders, the Chairman of the Board of Directors of the Company, were
holders of $20,000, $25,000 and 25,000, respectively, worth of Notes. Pursuant
to the terms of the Convertible Subordinated Note Purchase Agreement, they each
converted their Notes into 4,000, 5,000 and 5,000 shares of Common Stock,
respectively, on December 18, 1996.
The Jeanne Kanders Revocable Inter Vivos Trust and The Ralph
F. Kanders Revocable Inter Vivos Trust, named for the parents of Warren B.
Kanders, the Chairman of the Board of Directors of the Company, were holders of
$150,000 and $100,000, respectively, worth of Notes. The trusts converted their
Notes into 30,000 and 20,000 shares of Common Stock, respectively, pursuant to
the terms of the Convertible Subordinated Note Purchase Agreement on December
18, 1996.
Other than as described above, there have not been, nor are
there any currently proposed transactions, or any series of similar
transactions, since the beginning of Fiscal 1996, to which the Company was or
is to be a party, in which the amount involved exceeds $60,000 and in which any
director, executive officer, security holder or any member of the immediate
family of any of the foregoing persons had, or will have, a direct or indirect
material interest.
Since the beginning of Fiscal 1996, no director or executive
officer of the Company, nor any member of their immediate family or any
affiliate thereof is, has become or was indebted to the Company in an amount in
excess of $60,000.
SUBSIDIARIES
The Company is not a subsidiary of any other corporation,
partnership, limited liability company or other entity.
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PROPOSAL 2
PLAN OF INTERNAL RESTRUCTURING
INTRODUCTION
The Company is incorporated under the laws of the State of
Delaware. Its corporate headquarters are in Yulee, Florida. The Company is
engaged in the development, manufacture and distribution of bullet and
projectile resistant garments. These include bullet resistant and sharp
instrument penetration resistant vests, bullet resistant blankets, bomb
disposal suits and helmets, bomb protection and disposal equipment and load
bearing vests. In addition to these products, the Company develops,
manufactures and distributes other ballistic protection and security equipment,
including explosive ordnance device ("EOD") handling and detection equipment,
EOD suppression and disposal equipment, helmets, face masks, shields, hard
armor ballistic plates, customized armor for vehicles and other custom armored
products.
The Company presently operates as an operating entity --
holding certain of its assets and conducting certain of its operations
directly, and as a holding company, pursuant to which it owns all of the
outstanding capital stock of four subsidiary corporations which hold other
assets and conduct other operations related to the business of the Company.
The Board of Directors has determined that it would be in the
best interests of the Company and its Stockholders for the Board of Directors
to have the flexibility to transfer some or substantially all of the operating
assets held by the Company to one or more wholly-owned subsidiaries, with the
result that the Company would become solely a holding company (the
"Restructuring"). Toward this end, the Board of Directors has approved a plan
of restructuring (the "Restructuring Plan") providing for the transfer of
substantially all of the Company's operating assets and related liabilities to
one or more wholly-owned subsidiaries that the Company will incorporate for
such purpose. To effect the Restructuring, the Company will form a subsidiary
corporation under Delaware law called American Body Armor & Equipment, Inc., a
Delaware corporation ("ABA-DE"). Following the formation of ABA-DE, the Company
will transfer into ABA-DE all of the Company's operating assets and related
liabilities.
The following chart sets forth the organizational structure
of the Company before and after the proposed Restructuring:
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<PAGE>
CURRENT STRUCTURE
Armor Holdings, Inc.,
a Delaware corporation (the "Company")
<TABLE>
<S> <C> <C> <C>
Defense Technology Armor Holdings NIK Public Safety, Inc., Armor Holdings
Corporation of America, Properties, Inc., a a Delaware corporation Limited, a United
a Delaware corporation Delaware corporation (Subsidiary) Kingdom corporation
(Subsidiary) (Subsidiary) (Subsidiary)
</TABLE>
PROPOSED STRUCTURE
Armor Holdings, Inc.,
a Delaware corporation (the "Company")
(Holding company)
<TABLE>
<S> <C> <C> <C>
ABA-DE, a Defense Technology Armor Holdings NIK Public Armor Holdings
Delaware Corporation of Properties, Inc., a Safety, Inc., a Limited, a United
corporation America, a Delaware Delaware corporation Delaware Kingdom
(Subsidiary) corporation (Subsidiary) corporation corporation
(Subsidiary) (Subsidiary) (Subsidiary)
</TABLE>
The implementation of the Restructuring Plan will not have a
material effect on the consolidated financial statements of the Company, nor
will it alter Stockholders' percentage ownership interests. Consummation of the
Restructuring will not affect the voting rights and dividend and liquidation
rights of the Stockholders. If the Stockholders approve the Restructuring Plan
and the Company obtains all required third party consents, including, but not
limited to, the consent of the Bankruptcy Court, if required, the Board of
Directors may choose to implement the entire plan or a portion of the plan, or
the Board of Directors may elect not to implement the plan at all if it
determines that the costs or other considerations relating to the
implementation of the Restructuring Plan outweigh the benefits to be gained by
the Restructuring.
The submission of the Restructuring Plan to Stockholders is
not intended to affect the Company's right under applicable Delaware law to
dispose of less than all or substantially all of its assets without Stockholder
approval. If in the event the Restructuring Plan is not approved by the
Stockholders but all required third party consents are obtained, including, but
not limited to, the consent of the Bankruptcy Court, if required, the Company
may nevertheless, from time to time in the future, transfer portions of its
assets to subsidiaries or to third parties on terms and for consideration
approved by the Board of Directors, subject to applicable Delaware law, without
seeking Stockholder approval. Approval of the Restructuring Plan will not
preclude any Stockholder's right to challenge any future dispositions by the
Company of the assets of the Company (including the stock of any subsidiaries),
if such dispositions are not made in compliance with applicable law.
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<PAGE>
REASONS FOR THE RESTRUCTURING
The new structure of the Company and its subsidiaries will
permit greater flexibility in the management and financing of new and existing
business operations. The holding company structure will also provide the
Company with greater flexibility to expand in the future through acquisitions
of companies which may be strategically advantageous to the Company's long-term
growth. Moreover, the Board of Directors believes that the holding company
structure is better suited to the development of the Company's international
business. The Board of Directors also believes that the line-of-business
restructuring could further the objective of operating the Company's businesses
on a more self-sufficient, independent economic basis. In addition, the holding
company structure could permit improved delineation of administrative and other
responsibilities within the corporate structure because it will permit a
designated group of executive employees to concentrate their efforts on the
concerns of the consolidated enterprise as a whole, while allowing the
subsidiaries and subsidiary management to focus on subsidiary-specific
objectives. This will enable the Company to further link executive compensation
to Company performance, thereby providing for better accountability.
EFFECT ON STOCKHOLDERS' RIGHTS
The outstanding stock of the Company will not be affected by
the proposed Restructuring. Consummation of the Restructuring Plan will not
affect the voting, dividend, liquidation rights or ownership interests of the
Stockholders.
The Stockholders of the Company will not directly elect the
directors of the operating subsidiaries. Directors of the subsidiaries are
elected by the Board of Directors of the Company, with the Company being the
sole stockholder of the subsidiaries. The overall management of the affairs and
operations of the Company will continue to be under the direction of the Board
of Directors.
The Company has no present intention to cause any subsidiary
which may be formed to make a further transfer of assets to any affiliate of
the Company (other than other wholly-owned subsidiaries) or to any unrelated
third party. The Company does not intend to seek Stockholder approval of any
subsequent dispositions of assets by a subsidiary or the stock of any
subsidiary unless such assets or stock to be transferred constitute all or
substantially all of the assets of the Company and its subsidiaries taken as a
whole and where Stockholder approval is required by law.
EFFECT ON COMPANY'S FINANCIAL STATEMENTS
The implementation of the Restructuring Plan will not have a
material effect on the financial statements of the Company.
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<PAGE>
OTHER EFFECTS ON THE COMPANY AND ITS STOCKHOLDERS
Except for the structural changes, consummation of the
Restructuring Plan is not expected to result in any material change in the
overall operation of the Company or location of its facilities. Similarly, the
Restructuring will not result in any changes in the current membership of the
Board of Directors of the Company, and the officers of the Company will remain
in place after consummation of the Restructuring. In addition, some persons who
are currently serving as officers of the Company may become officers or
directors of one or more of the subsidiaries.
While the transactions presently contemplated under the
Restructuring Plan do not create a conflict of interest between the Company and
any of its Stockholders, in the event that any of the subsidiaries, through
public or private sale, should be owned in part by persons other than the
Company, such conflicts could arise. The Company has no present intention to
effect a public or private sale of a part of the ownership of any of its
subsidiaries.
If the Restructuring Plan is consummated, the Company will
retain administrative functions and related assets, as well as a core group of
senior management officers and employees.
TRANSFER OF ASSETS
Except for those operations conducted by the Company's
subsidiaries, all of the Company's operations are conducted directly by the
Company. If the Restructuring Plan is implemented as contemplated, all of the
operating assets and related liabilities of the Company's business except those
held by the Company's subsidiaries would be transferred to one or more
wholly-owned subsidiaries.
DISADVANTAGES OF RESTRUCTURING
The Board of Directors believes that the disadvantages of the
Restructuring are not significant or material and will be offset by both the
increased focus on asset utilization and responsibility. Possible disadvantages
of the Restructuring include a possible small increase in accounting and
administrative costs and possible duplication of some administrative functions.
As previously noted, the Stockholders of the Company will
elect the directors of the Company, who will have overall responsibility for
the management of the Company and its subsidiaries. The Stockholders' statutory
right to inspect the books, records and stockholder lists of the Company under
applicable Delaware law may not extend to the books and records of the
operating subsidiaries.
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<PAGE>
TAX CONSEQUENCES OF THE RESTRUCTURING
It is currently contemplated that any assets transferred
pursuant to the Restructuring Plan will be conveyed to the subsidiary or
subsidiaries on a tax-free basis pursuant to Section 351 of the Internal
Revenue Code of 1986, as amended.
VOTE REQUIRED
The affirmative vote of holders of a majority of the
outstanding shares of the Company's Common Stock is required for the
ratification of the Restructuring Plan under Delaware law.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has adopted and recommends a vote FOR
Proposal 2 on the Proxy Card.
PROPOSAL 3
PROPOSED AMENDMENT TO THE
1996 NON-EMPLOYEE DIRECTORS
STOCK OPTION PLAN
At the Meeting, the Stockholders will be asked to consider
and vote upon a proposal to amend the Company's 1996 Non-Employee Directors
Stock Option Plan (the "1996 Directors Plan") to increase by 150,000 shares the
total number of shares of the Company's Common Stock that may be awarded under
the 1996 Directors Plan.
On March 24, 1997, the Board of Directors approved an
amendment to the 1996 Directors Plan to increase the number of shares of Common
Stock available for issuance pursuant to the 1996 Directors Plan by 150,000
shares to a total of 450,000 shares. The Board of Directors directed that such
amendment be submitted for approval of the Stockholders at the Meeting. The
1996 Directors Plan, which was approved by the Stockholders on July 16, 1996 at
the annual meeting of stockholders, originally provided for the grant to
non-employee directors of the Company of stock options to purchase up to
300,000 shares of Common Stock. Should the amendment not be approved, the 1996
Directors Plan will remain in force without taking into effect this proposed
amendment.
The purpose of the 1996 Directors Plan, which is unchanged by
the proposed amendment, is to benefit the Company and its stockholders by
allowing those members of the Board of Directors of the Company who are neither
current nor former employees of the Company to increase their financial stake
in the Company through ownership of Common Stock, thus underscoring the
directors' mutual interest with stockholders in increasing the long-term value
of the Company's stock. In order that the 1996 Directors Plan continue to serve
its intended purpose, the proposed amendment would increase the number of
shares of Common Stock available for issuance under the 1996 Directors Plan.
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<PAGE>
The following summary of the 1996 Directors Plan is qualified
in its entirety by reference to the text of the 1996 Directors Plan, as amended
and as set forth as Appendix A hereto.
GENERAL INFORMATION
Participation in the 1996 Directors Plan is limited to
members of the Board of Directors who are not current or former employees of
the Company or any of its subsidiaries ("Non-Employee Directors"). After the
election of seven directors at the Meeting, there will be six Non-Employee
Directors.
STOCK OPTION GRANT
The 1996 Directors Plan is a formula plan pursuant to which
non-qualified options to acquire 75,000 shares of the Company's Common Stock
will be automatically granted to each Non-Employee Director upon the date of
his or her initial election or appointment to the Board of Directors in
consideration for service as a Director. There are 300,000 shares of Common
Stock reserved for issuance under the 1996 Directors Plan. Options covering all
300,000 shares available under the 1996 Directors Plan have been granted. If
the Stockholders approve the amendment, an additional 150,000 shares will be
available for future option grants to non-employee directors who may join the
Board of Directors in the future, bringing the total number of shares available
under the 1996 Directors Plan to 450,000. Under the 1996 Directors Plan's
formula, the exercise price for all 75,000 options granted to each Non-Employee
Director under the 1996 Directors Plan will be the closing price on the date of
the grant of the Company's Common Stock as quoted on the composite tape of the
American Stock Exchange, or on such exchange as the Company's Common Stock may
then be trading. Of the 75,000 options granted to each Non-Employee Director,
options to acquire 25,000 shares become exercisable upon each of the first
three anniversary dates following the date of the grant and all 75,000 options
granted to each Non-Employee Director shall expire ten years from the date of
grant. The exercise price must be paid in cash. If, on the day of the grant,
counsel for the Company determines, in her/his sole discretion, that the
Company is in possession of material, undisclosed information that would
prevent it from issuing securities, then the grant of options to Non-Employee
Directors will be suspended until the second day after public dissemination of
the information (or the first trading day thereafter). The amount, pricing and
other terms of the grant will remain as set forth in the 1996 Directors Plan,
with the exercise price of the option to be determined in accordance with the
formula on the date the option is finally granted.
CESSATION OF SERVICE
Upon retirement, a Non-Employee Director's options will
continue to become exercisable and must be exercised by the earlier of (i) 36
months following the date of retirement or (ii) the expiration of the
applicable option period, or such options shall be forfeited. Upon a
Non-Employee Director's disability or death, those options held by the
Non-Employee Director
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<PAGE>
for at least one year prior to the date of death or the date of cessation of
service following disability shall become immediately exercisable; the
Non-Employee Director or his/her legal representatives or heirs must exercise
such options by the earlier of (i) 6 months or 36 months from the date of
cessation of service due to disability or death, respectively, as the case may
be, or (ii) the expiration of the applicable option period, or such options
shall be forfeited. Should an individual cease to serve as a Non-Employee
Director for any reason other than retirement, disability, death or cause,
he/she will have 90 days within which to exercise only those options which were
exercisable as of the date he/she ceased to serve as a director.
FEDERAL INCOME TAX CONSEQUENCES
The grant of a non-qualified stock option will not result in
income for the grantee or in a deduction for the Company. The exercise of a
stock option would result in ordinary income for the grantee and a deduction
for the Company measured by the difference between the option price and the
fair market value of the shares received at the time of exercise.
OTHER INFORMATION
Upon their initial election to the Board of Directors on
January 18, 1996, each of Messrs. Ehrlich and Sokolow, both of whom are
Non-Employee Directors, were granted 75,000 stock options pursuant to the terms
of the 1996 Directors Plan, subject to Stockholder approval of the plan. The
Stockholders approved the 1996 Directors Plan at the 1996 annual meeting of
stockholders held on July 16, 1996. Such options vest in three equal annual
installments on January 18, 1997, 1998 and 1999, at an exercise price of $3.75
per share, the closing trading price of the Company's Common Stock on National
Association of Securities Dealers Automated Quotation System ("NASDAQ") on
January 18, 1996.
Upon his initial election to the Board of Directors on May
13, 1996, Mr. Strauss, a Non-Employee Director, was granted 75,000 stock
options pursuant to the terms of the 1996 Directors Plan, subject to
Stockholder approval of the plan. The Stockholders approved the 1996 Directors
Plan at the 1996 annual meeting of stockholders held on July 16, 1996. Such
options vest in three equal annual installments on May 13, 1997, 1998, and
1999, at an exercise price of $7.50 per share, the closing trading price of the
Company's Common Stock on the American Stock Exchange on May 13, 1996.
Upon her initial election to the Board of Directors on
December 9, 1996, Ms. Townsend, a Non-Employee Director, was granted 75,000
stock options pursuant to the terms of the 1996 Directors Plan. Such options
vest in three equal annual installments on December 9, 1997, 1998 and 1999, at
an exercise price of $8.00 per share, the closing trading price of the
Company's Common Stock on the American Stock Exchange on December 9, 1996.
The amendment to the 1996 Directors Plan will become
effective upon the approval of the Company's Stockholders and the plan itself
will terminate, for purposes of
29
<PAGE>
granting further options, on December 31, 2006 unless terminated earlier by the
Board of Directors or extended by the Board with the approval of Stockholders.
Messrs. Kanders and Bartlett, who are also Non-Employee
Directors of the Company, voluntarily renounced their eligibility to
participate in the 1996 Directors Plan. Mr. Spiller, who is a Director but is
also the Chief Executive Officer and President of the Company, is not eligible
to participate in the 1996 Directors Plan.
As of __________ __, 1997 the last full trading date prior to
the printing and mailing of this Proxy Statement, the reported closing price of
the Company's Common Stock on the American Stock Exchange was $________.
VOTE REQUIRED
The affirmative vote of holders of a majority of the
outstanding shares of Common Stock present or represented by proxy and voting
at a stockholders meeting at which a quorum is present is required for the
approval of the proposed amendment to the 1996 Directors Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has adopted and recommends that the
Stockholders vote FOR Proposal 3 on the Proxy Card.
PROPOSAL 4
PROPOSED AMENDMENT TO THE 1996 STOCK OPTION PLAN
At the Meeting, the Stockholders will be asked to consider
and vote upon a proposal to amend the Company's 1996 Stock Option Plan (the
"1996 Plan") to increase by 250,000 shares the total number of shares of the
Company's Common Stock that may be awarded under the 1996 Plan.
On March 24, 1997, the Board of Directors approved an
amendment to the 1996 Plan to increase the number of shares of Common Stock
available for issuance pursuant to the 1996 Plan by 250,000 shares to a total
of 1,500,000 shares of Common Stock of the Company and directed that such
amendment be submitted for approval of Stockholders at the Meeting. The 1996
Plan, which was approved by the Stockholders on July 16, 1996 at the annual
meeting of Stockholders, originally provided for the grant to employees,
officers, directors and consultants (collectively, "Participants") of stock
options to purchase up to 1,500,000 shares of Common Stock. Should the
amendment not be approved, the 1996 Plan will remain in force without taking
into effect this proposed amendment.
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<PAGE>
The purpose of the 1996 Plan, which is unchanged by the
proposed amendment, is to advance the interests of the Company by encouraging
and enabling the acquisition of a financial interest in the Company by its
directors, officers, employees and consultants. The 1996 Plan is intended to
aid the Company in attracting and retaining competent employees, to stimulate
the efforts of such employees and to strengthen their desire to remain with the
Company. In order that the Plan may continue to serve its intended purposes,
the proposed amendment would increase the number of shares of Common Stock
available for issuance under the 1996 Plan.
The following summary of the 1996 Plan is qualified in its
entirety by reference to the text of the 1996 Plan, as amended and as set forth
as Appendix B hereto.
SUMMARY DESCRIPTION OF THE 1996 PLAN
The 1996 Plan is administered by the Option Committee of the
Board of Directors, which determines those individuals who will receive
options, the time period during which the options may be partially or fully
exercised, the number of shares of Common Stock that may be purchased under
each option and the option exercise price. Under certain conditions, the Board
of Directors has the power to administer the 1996 Plan.
If the amendment to the 1996 Plan is approved by
Stockholders, the total number of Options authorized under the 1996 Plan will
be 1,750,000 shares (which number is subject to adjustment in the event of
stock dividends, stock splits and other similar events) of the Company's Common
Stock. To the extent that Options granted under the 1996 Plan expire or
terminate without having been exercised, the shares of the Company's Common
Stock covered by such Options will again become available for award.
Generally, Options may be granted only to employees employed
and consultants engaged by the Company or of any subsidiary corporation or
parent corporation of the Company. Directors who are also employees of the
Company are also eligible to participate. Consultants are eligible to receive
awards of Non-Qualified Options, but are not eligible to receive Incentive
Options. No person who owns, directly or indirectly, at the time of the
granting of an Incentive Option to him, 10% or more of the total combined
voting power of all classes of stock of the Company will be eligible to receive
any Incentive Options under the 1996 Plan unless the option price is at least
110% of the fair market value of the Common Stock subject to the option,
determined on the date of grant.
Common Stock purchased on the exercise of Options may be paid
for in cash or by certified check, or with shares of the Company's Common Stock
(if permitted by the terms of the Option and by applicable law) or by payment
on such terms as the Option Committee shall determine.
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The Option Committee shall have the option at any time to
suspend or terminate the 1996 Plan, provided that rights and obligations under
any Option granted while the 1996 Plan was in effect may not be altered or
impaired by suspension or termination of the 1996 Plan, except with the consent
of the holder thereof.
The Board of Directors or the Option Committee, as the case
may be, shall have the right, from time to time, to amend the 1996 Plan,
provided that no amendment shall be made without the approval of the
Stockholders to the extent required by Rule 16b-3 or for the exception for
performance-based compensation under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), that will: (i) increase the total number
of shares reserved for Options under the 1996 Plan (other than an increase
resulting from certain adjustments); (ii) reduce the exercise price of any
Option granted thereunder; (iii) modify the provisions of the 1996 Plan
relating to eligibility; or (iv) materially increase the benefits accruing to
participants under the 1996 Plan or extend the maximum option period
thereunder. The Board of Directors or the Option Committee, as the case may be,
shall be authorized to amend the 1996 Plan and the Options granted thereunder
to permit the Incentive Options granted thereunder to qualify as incentive
stock options within the meaning of Section 422 of the Code.
In the event of any change in the outstanding shares of the
Company's Common Stock (through events such as a stock split, stock dividend,
recapitalization of the Company or other like change in its capital structure),
the Option Committee will make such adjustment to each outstanding Option that
it, in its sole discretion, deems appropriate, subject to the provisions of
Section 424(a) of the Code as to Incentive Options. It is intended that
Incentive Options granted under the 1996 Plan will meet the definitional
requirements of Section 422(b) of the Code for "incentive stock options."
Under the Code, an employee generally is not subject to
regular income tax upon the grant or exercise of an Incentive Option if,
subsequent to its exercise, the employee holds the stock received for the
longer of two years from the date of the grant or one year from the date of
exercise (the "Required Holding Period"). Upon the sale of such stock
subsequent to the Required Holding Period, the difference, if any, between the
amount realized from the sale and the tax basis to the employee will be taxed
as long-term capital gain or loss (provided that such stock was held by the
employee as a capital asset at such time).
In general, if an employee: (i) exercises an Incentive Option
by delivering stock previously acquired pursuant to the exercise of an
Incentive Option before the end of the Required Holding Period applicable to
such stock; or (ii) after exercising an Incentive Option, disposes of the stock
so acquired before the end of the Required Holding Period (i.e., in either
case, makes a "disqualifying disposition"), such employee would be deemed in
receipt of ordinary income in the year of the disqualifying disposition in an
amount equal to the excess of the fair market value of the stock at the date of
exercise over the exercise price. However, if the disposition of the stock is a
sale or exchange with respect to which a loss, if sustained, would be
recognized to such employee, and if the sale proceeds are less than the fair
market
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value of the stock on the date of exercise of the Incentive Option, the
employee's ordinary income would be limited to the excess, if any, of the
amount realized on such disposition over the tax basis of such stock. If the
amount realized upon a taxable disposition of the stock exceeds the fair market
value of the stock on the date of exercise, the excess would be treated as
short-term or long-term capital gain, depending on the applicable holding
period on the disposition date (provided that such stock was held by the
employee as a capital asset at such time).
A deduction is not allowed to the Company for federal income
tax purposes with respect to the grant or exercise of an Incentive Option or
the disposition, after the Required Holding Period, of stock acquired upon
exercise. In the event of a disqualifying disposition, a federal income tax
deduction will be allowed to the Company in an amount equal to the ordinary
income taxable to the employee, provided that such amount constitutes an
ordinary and necessary business expense to the Company and is reasonable.
For purposes of computing whether an employee is subject to
any alternative minimum tax liability, an employee who exercises an Incentive
Option generally would be required to increase alternative minimum taxable
income, and compute the tax basis in the stock so acquired, in the same manner
as if the optionee had exercised a Non-Qualified Option.
A Participant who receives a Non-Qualified Option will not
recognize any taxable income upon the grant of such Non-Qualified Option. In
general, upon exercise of a Non-Qualified Option, a participant will be treated
as having received ordinary income in an amount equal to the excess of the fair
market value of the stock at the time of exercise over the exercise price.
Any holder of a Non-Qualified Option who is subject to the
reporting requirements of Section 16(a) of the Exchange Act should consult his
tax advisor as to whether the timing of income recognition is deferred for any
period following exercise of such Non-Qualified Option (the "Deferral Period").
Absent a written election filed with the IRS within thirty days after the date
of exercise pursuant to Section 83(b) of the Code to include in income, as of
the exercise date, the excess of the fair market value of the stock on the
exercise date over the exercise price, recognition of income by the holder will
be deferred until the expiration of the Deferral Period, if any.
The 1996 Plan is not qualified under the provisions of
Section 401(a) of the Code and is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
Except as hereinafter set forth, the number of stock options
that will be awarded to the Company's Chief Executive Officer and the other
named executive officers of the Company pursuant to the 1996 Plan are not
currently determinable. Except as hereinafter set forth, no awards to the
Company's Chief Executive Officer and the other named executive
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officers were made in 1996. In 1996, 150,000 stock options under the 1996 Plan
were granted to Robert R. Schiller, Vice President-Corporate Development of the
Company, and 184,000 stock options were granted to 14 employees and
consultants. In 1996, no stock options were granted under the 1996 Plan to
Directors who were not executive officers. To date, stock options have been
granted at exercise prices which range from $.79 per share to $8.00 per share.
As of ____________ __, 1997, the last full trading date prior
to the printing and mailing of this Proxy Statement, the reported closing price
of the Company's Common Stock on the American Stock Exchange was
$_____________.
VOTE REQUIRED
The affirmative vote of holders of a majority of the
outstanding shares of Common Stock present or represented by proxy and voting
at a stockholders meeting at which a quorum is present is required for the
approval of the proposed amendment to the 1996 Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has adopted and recommends that the
Shareholders vote FOR Proposal 4 on the Proxy Card.
PROPOSAL 5
RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee of the Board
of Directors, the Board has appointed Deloitte & Touche LLP as independent
certified public accountants for the Company to audit the consolidated
financial statements of the Company and its subsidiaries for the fiscal year
ending December 27, 1997 ("Fiscal 1997"). Deloitte & Touche LLP has acted in
this capacity since 1990.
The Company's Board of Directors recommends the ratification
of the appointment of Deloitte & Touche LLP as independent certified public
accountants for the Company to audit the financial statements of the Company
for Fiscal 1997. If a majority of the Stockholders voting at the Meeting at
which a quorum is present, in person or by proxy, should not approve such
appointment, the Audit Committee and the Board of Directors of the Company will
reconsider the appointment of independent certified public accountants.
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VOTE REQUIRED
The affirmative vote of holders of a majority of the
outstanding shares of Common Stock present and voting at a Meeting at which a
quorum is present is required for the reappointment of Deloitte & Touche LLP as
the Company's independent certified public accountants for Fiscal 1997.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the Stockholders
reappoint Deloitte & Touche LLP as independent certified public accountants of
the Company for the Fiscal 1997 by voting FOR Proposal 5 on the Proxy Card.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of
Directors does not intend to present any other matter for action at the Meeting
other than as set forth in the Notice of Annual Meeting and this Proxy
Statement. If any other matters properly come before the Meeting, it is intend
that the shares represented by the proxies will be voted, in the absence of
contrary instructions, in the discretion of the persons named in the proxy.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's
directors and executive officers and any persons who own more than 10% of the
Company's capital stock to file with the Commission (and, if such security is
listed on a national securities exchange, with such exchange), various reports
as to ownership of such capital stock. Such persons are required by Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely upon reports and representations submitted by
the directors, executive officers and holders of more than 10% of the Company's
capital stock, all Forms 3, 4 and 5 showing ownership of and changes of
ownership in the Company's capital stock during Fiscal 1996 were timely filed
with the Commission, NASDAQ and the American Stock Exchange, except as
hereinafter set forth. Two directors and an executive officer did not timely
file Form 3 reports upon assuming their positions with the Company, and did not
timely report a total of 4 transactions on such form. In addition, two
directors did not timely report a total of four transactions on Forms 3 and 4.
ANNUAL REPORT
A copy of the Company's 1996 Annual Report to Stockholders
accompanies this Proxy Statement. Any Stockholder who has not received a copy
of the 1996 Annual Report to
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Stockholders and wishes to do so should contact the Company's Corporate
Secretary by mail at the address set forth on the notice of annual meeting or
by telephone at (904) 741-5402.
FORM 10-KSB
The Company will provide, without charge, to each Stockholder
as of the Record Date, on the written request of the Stockholder, a copy of the
Company's Annual Report on Form 10-KSB and all amendments thereto for the year
ended December 28, 1996, including the financial statements and schedules, as
filed with the Commission. Stockholders should direct the written request to
the Company's Corporate Secretary at c/o Armor Holdings, Inc., 13386
International Parkway, Jacksonville, Florida 32218.
PROPOSALS BY STOCKHOLDERS
Any proposal of a Stockholder intended to be presented at the
annual meeting of stockholders to be held in 1998 must be received by the
Company no later than December 30, 1997 to be considered for inclusion in the
Proxy Statement and form of proxy for the 1998 annual meeting. Proposals must
comply with Rule 14a-8 promulgated by the Securities and Exchange Commission
pursuant to the Exchange Act.
FOR THE BOARD OF DIRECTORS
CAROL T. BURKE
SECRETARY
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APPENDIX A
<PAGE>
APPENDIX A
ARMOR HOLDINGS, INC.
AMENDED 1996 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Amended 1996 Non-Employee Directors Stock Option Plan
(the "Plan") is established to attract, retain and compensate for service as
members of the Board of Directors of Armor Holdings, Inc. (the "Company")
highly qualified individuals who are not current or former employees of the
Company and to enable them to increase their ownership in the Company's Common
Stock. The Plan will be beneficial to the Company and its stockholders since it
will allow these directors to have a greater personal financial stake in the
Company through the ownership of Company stock, in addition to underscoring
their common interest with shareholders in increasing the value of the Company
stock longer term.
1. ELIGIBILITY
All members of the Company's Board of Directors who are not
current or former employees of the Company or any of its subsidiaries
("Non-Employee Directors") are eligible to participate in the Plan.
2. OPTIONS
Only nonqualified stock options ("NQSOs") may be granted
under the Plan. Grants shall be evidenced by Option Agreements in form
promulgated by the Board of Directors from time to time.
3. SHARES AVAILABLE
A) NUMBER OF SHARES AVAILABLE: There is hereby reserved for issuance
under the Plan 450,000 shares of Company Common Stock, par value $.01 per
share, which may be authorized but unissued shares, treasury shares, or shares
purchased on the open market.
B) RECAPITALIZATION ADJUSTMENT: In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, or any other change in the corporate structure
or shares of the Company, adjustments in the number and kind of shares
authorized by the Plan, in the number and kind of shares covered by, and in the
option price of outstanding NQSOs under the Plan shall be made if, and in the
same manner as, such adjustments are made to NQSOs issued under the Company's
1996 Stock Option Plan.
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4. ANNUAL GRANT OF NONQUALIFIED STOCK OPTIONS
Upon each Non-Employee Director's initial election or
appointment to the Board of Directors, such Non-Employee Director shall
automatically receive NQSOs covering 75,000 shares of the Company's Common
Stock. Notwithstanding the foregoing, if, on that day, counsel for the Company
determines, in her/his sole discretion, that the Company is in possession of
material, undisclosed information about the Company, then the grant of NQSOs to
Non-Employee Directors shall be suspended until the second day after public
dissemination of such information and the price, exercisability date and option
period shall then be determined by reference to such later date. If Company
Common Stock is not traded on the American Stock Exchange or on such exchange
as such stock may then be trading on any date a grant would otherwise be
awarded, then the grant shall be made the next day thereafter that Company
Common Stock is so traded.
5. OPTION PRICE
The price of all 75,000 NQSOs granted to each Non-Employee
Director under the Plan shall be the closing price on the date of the grant of
the Company's Common Stock as quoted on the composite tape of the American
Stock Exchange or of such exchange upon which the Company's Common Stock may
then currently be trading.
6. OPTION PERIOD
Except as otherwise provided herein, of the 75,000 NQSOs
granted to each Non- Employee Director under the Plan, NQSOs covering 25,000
shares shall become exercisable upon each of the first three anniversary dates
following the date of the grant and all 75,000 NQSOs granted to each
Non-Employee Director shall expire ten years after the date of the grant
("Option Period").
7. PAYMENT
The NQSO price shall be paid in cash in U.S. dollars at the
time the NQSO is exercised.
8. CESSATION OF SERVICE
Upon cessation of service as a Non-Employee Director (for
reasons other than retirement, death, disability or "cause"), only those NQSOs
immediately exercisable at the date of cessation of service shall be
exercisable by the grantee. Such NQSOs must be exercised within ninety days of
cessation of service (but in no event after the expiration of the Option
Period) or they shall be forfeited.
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(A) RETIREMENT
If a grantee ceases service as a Non-Employee Director and is
at least age 65 with ten or more years of service or age 70 with five or more
years of service, then any of his/her outstanding NQSOs shall continue to
become exercisable. All outstanding NQSOs must be exercised by the earlier of
(i) thirty-six (36) months following the date of such cessation of service or
(ii) the expiration of the Option Period, or such NQSOs shall be forfeited.
(B) DISABILITY
If a grantee ceases service as a Non-Employee Director on
account of disability, then those of his/her NQSOs which had been held for at
least twelve (12) months on the date of cessation of service shall become
immediately exercisable. All NQSOs which became exercisable upon cessation of
service following disability and those NQSOs which were exercisable on the date
of such termination of employment following disability must be exercised by the
earlier of (i) six (6) months following the date of such cessation of service
or (ii) the expiration of the Option Period, or such NQSOs shall be forfeited.
"Disability" shall mean total and permanent disability as
defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
(C) DEATH
Upon the death of a grantee, those NQSOs which had been held
for at least twelve months at date of death shall become immediately
exercisable upon death. The NQSOs which become exercisable upon the date of
death and those NQSOs which were exercisable on the date of death may be
exercised by the grantee's legal representatives or heirs by the earlier of (i)
thirty-six (36) months from the date of death or (ii) the expiration of the
Option Period; if not exercised by the earlier of (i) or (ii), such NQSOs shall
be forfeited.
(D) CAUSE
Upon removal of a Non-Employee Director, failure to stand for
reelection or failure to be renominated for "cause," or if the Company obtains
or discovers information after termination of service of a Non-Employee
Director that would have justified his/her removal for cause during such
directorship, all outstanding Options granted to such Non-Employee Director
pursuant to this Plan shall, upon giving written notice thereof by the Company,
shall immediately terminate and shall be null and void.
"Cause" shall mean an act or a failure to act that
constitutes "cause" for removal of a director under applicable Delaware law.
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9. ADMINISTRATION AND AMENDMENT OF THE PLAN
The Plan shall be administered by the Option Committee of the
Board of Directors of the Company. The Plan may be terminated or amended by the
Board of Directors as it deems advisable. However, an amendment revising the
price, date of exercisability, option period of, or amount of shares under a
NQSO shall not be made more frequently than every six (6) months unless
necessary to comply with applicable laws or regulations. No amendment may
revoke or alter in a manner unfavorable to the grantees any NQSOs then
outstanding, nor may the Board of Directors amend the Plan without shareholder
approval where the absence of such approval would cause the Plan to fail to
comply with Rule 16b-3 under the Securities Exchange Act of 1934 (the "Act"),
or any other requirement of applicable law or regulation. A NQSO may not be
granted under the Plan after December 31, 2006 but NQSOs granted prior to that
date shall continue to become exercisable and may be exercised according to
their terms.
10. NON-TRANSFERABILITY
No NQSO granted under the Plan is transferable other than by
will or the laws of descent and distribution. During the grantee's lifetime, a
NQSO may only be exercised by the grantee or the grantee's guardian or legal
representative.
11. COMPLIANCE WITH SEC REGULATIONS
It is the Company's intent that the Plan comply in all
respects with Rule 16b-3 of the Act, and any regulations promulgated
thereunder. If any provision of the Plan is later found not to be in compliance
with the Rule, the provision shall be deemed null and void. All grants and
exercises of NQSOs under the Plan shall be executed in accordance with the
requirements of Section 16 of the Act, as amended, and any regulations
promulgated thereunder.
12. DISINTERESTED PERSON STATUS
Notwithstanding anything contained herein to the contrary,
neither the Board of Directors nor any person designated to assist the Board of
Directors in the administration of the Plan may take any action which would
cause any Non-Employee Director of the Company to cease to be a "disinterested
person" for purposes of Rule 16b-3 with regard to this Plan or any other stock
option or other equity plan of the Company. In particular, to the extent
required as aforesaid, the Board of Directors shall not have any discretion as
to:
(i) the selection of Non-Employee Directors who
are eligible to receive awards of Stock Options;
(ii) the number of Stock Options awarded to any
Non-Employee Director.
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13. RESTRICTIONS ON DELIVERY AND SALE OF SHARES
Each award granted under the Plan is subject to the condition
that if at anytime the Option Committee, in its discretion, shall determine
that the listing, registration or qualification of the stock covered by such
award upon any securities exchange or under any state or federal law is
necessary or desirable as a condition of or in connection with the granting of
such award or the purchase or delivery of stock thereunder, the delivery of any
or all shares pursuant to such award may be withheld unless and until such
listing, registration or qualification shall have been effected. If a
registration statement is not in effect under the Securities Act of 1933 or any
applicable state securities laws with respect to the shares of stock
purchasable or otherwise deliverable under awards then outstanding, the Option
Committee may require, as a condition of any delivery of stock pursuant to the
award a written representation, from the recipient, that such shares are being
acquired for investment and not with a view to distribution and agreeing that
the stock will not be disposed of except pursuant to an effective registration
statement, unless the Company shall have received an opinion of counsel that
such disposition is exempt from such requirement under the Securities Act of
1933 and any applicable state securities laws. The Company may endorse on
certificates representing shares delivered pursuant to an award such legends
referring to the foregoing representations or restrictions or any applicable
restrictions applicable on resale as the Company, in its discretion, shall deem
appropriate.
14. MISCELLANEOUS
Except as provided in the Plan, no Non-Employee Director
shall have any claim or right to be granted a NQSO under the Plan. Neither the
Plan nor any action thereunder shall be construed as giving any director any
right to be retained in the service of the Company.
15. EFFECTIVE DATE
The Plan shall be effective on such date as stockholder
approval is obtained.
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APPENDIX B
<PAGE>
APPENDIX B
ARMOR HOLDINGS, INC.
AMENDED 1996 STOCK OPTION PLAN
I. PURPOSE
ARMOR HOLDINGS, INC. (the "Company") desires to afford
certain of its key employees and consultants and the key employees and
consultants of any subsidiary corporation or parent corporation of the Company
now existing or hereafter formed or acquired who are responsible for the
continued growth of the Company an opportunity to acquire a proprietary
interest in the Company, and thus to create in such key employees and
consultants an increased interest in and a greater concern for the welfare of
the Company and its subsidiaries.
The Company, by means of this Amended 1996 Stock Option Plan
(the "Plan"), seeks to retain the services of key employees and consultants
(sometimes hereinafter collectively, "Participants") and to enable the Company
to attract and retain persons of competence.
The stock options ("Options") offered pursuant to the Plan
are a matter of separate inducement and are not in lieu of any salary or other
compensation for the services of any key employee or consultant.
The Options granted under the Plan are intended to be either
incentive stock options ("Incentive Options") within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), or options that
do not meet the requirements for Incentive Options ("Non-Qualified Options"),
but the Company makes no warranty as to the qualification of any Option as an
Incentive Option.
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
AND OTHER LIMITATIONS
(a) The total number of shares of common stock of the Company
which may be purchased or acquired pursuant to the exercise of Options granted
under the Plan shall not exceed, in the aggregate, 1,750,000 shares of the
authorized common stock, $.01 par value per share, of the Company (the
"Shares"), such number subject to adjustment as provided in Article XI hereof.
Shares that are the subject of Options shall be counted only once in
determining
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whether the maximum number of Shares that may be purchased or awarded under the
Plan has been exceeded.
(b) Shares acquired under the Plan may be either authorized
but unissued Shares or Shares of issued stock held in the Company's treasury,
or both, at the discretion of the Company. If and to the extent that Options
granted under the Plan expire or terminate without having been exercised, the
Shares covered by such expired or terminated Options shall again become
available for award under the Plan.
Except as provided in Articles XVIII and XXI, the Company
may, from time to time during the period beginning on the date of the adoption
of the Plan by the Company (the "Effective Date") and ending on the date which
is ten (10) years from the Effective Date (the "Termination Date"), grant to
certain Participants (as hereinafter defined) of the Company, or of any
subsidiary corporation or parent corporation of the Company now existing or
hereafter formed or acquired, Incentive Options and/or Non-Qualified Options
under the terms hereinafter set forth.
As used in the Plan, the terms "subsidiary corporation" and
"parent corporation" shall mean, respectively, a corporation coming within the
definition of such terms contained in Sections 424(f) and 424(e) of the Code.
III. ADMINISTRATION
The board of directors of the Company (the "Board of
Directors") shall designate from among its members an option committee (the
"Committee") to administer the Plan. The Committee shall consist of two or more
members of the Board of Directors, each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3 (or any successor rule or regulation)
("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and each of whom shall be an "outside director" in
accordance with Section 162(m) of the Code. Pursuant to Rule 16b-3, promulgated
under the Exchange Act, in order for a director to be eligible to receive
benefits under a plan, a director must not, during the one (1) year period
prior to serving as a plan administrator, have been granted or awarded equity
securities pursuant to any plan of an issuer, except through participation in
formula grants, ongoing broad-based employee plans and elections to receive
annual directors' fees in securities of the issuer. A majority of the members
of the Committee shall constitute a quorum, and the act of a majority of the
members of the Committee shall be the act of the Committee. Any member of the
Committee may be removed at any time, either with or without cause, by
resolution adopted by the Board of Directors, and any vacancy on the Committee
at any time may be filled by resolution adopted by the Board of Directors.
Any or all powers and functions of the Committee may be
exercised at any time
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and from time to time by the Board of Directors; provided, however, that all of
the members of the Board of Directors are "disinterested persons" within the
meaning of Rule 16b-3 (or any successor rule or regulation) promulgated under
the Exchange Act.
Subject to the express provisions of the Plan, the Board of
Directors or the Committee, as the case may be, shall have authority, in its
discretion, to determine the Participants to whom Options shall be granted, the
time when such Options shall be granted, the number of Shares which shall be
subject to each Option, the purchase price or exercise price of each Option,
the period(s) during which such Options shall be exercisable (whether in whole
or in part) and the other terms and provisions thereof (which need not be
identical).
Subject to the express provisions of the Plan, the Board of
Directors or the Committee, as the case may be, also shall have authority to
construe the Plan and the Options granted thereunder, to amend the Plan and the
Options thereunder, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and provisions of the Options
(which need not be identical) granted thereunder and to make all other
determinations necessary or advisable for administering the Plan. The Board of
Directors or the Committee, as the case may be, also shall have the authority
to require, in its discretion, as a condition of the granting of any such
Option, that the Participants agree (i) not to sell or otherwise dispose of
Shares acquired pursuant to the exercise of such Option for a period of six (6)
months following the date of the acquisition of such Option and (ii) that in
the event of termination of employment of such employee or the engagement of
such consultant, as the case may be, other than as a result of dismissal
without cause, such Participant will not, for a period to be fixed at the time
of the grant of the Option, enter into any other employment or consulting
arrangement or participate directly or indirectly in any other business or
enterprise which is competitive with the business of the Company or any
subsidiary corporation or parent corporation of the Company, or enter into any
employment in which such employee or consultant, as the case may be, will be
called upon to utilize special knowledge obtained through employment with or
retention by the Company or any subsidiary corporation or parent corporation
thereof. In no event will a Participant who is subject to the reporting
requirements of Section 16(a) of the Exchange Act be entitled to sell or
otherwise dispose of any Shares acquired pursuant to exercise of any such
Options for a period of six (6) months from the date of the acquisition of such
Options.
The determination of the Board of Directors or the Committee,
as the case may be, on matters referred to in this Article III shall be
conclusive.
The Board of Directors or the Committee, as the case may be,
may employ such legal counsel, consultants and agents as it may deem desirable
for the administration of the Plan and may rely upon any opinion or computation
received from any such legal counsel, consultant or agent. Expenses incurred by
the Board of Directors or the Committee, as the case may be, in the engagement
of such counsel, consultant or agent shall be paid by the Company. No member or
former member of the Board of Directors or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
award of Options granted hereunder.
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IV. ELIGIBILITY
Options may be granted only to employees employed and
consultants engaged by the Company or of any subsidiary corporation or parent
corporation of the Company (such employees and consultants hereinafter at times
collectively referred to as the "Participants"), except as hereinafter
provided, and shall not be granted to any director who is not also an employee
of the Company. Any director who is a member of the Committee shall be
ineligible to receive an Option. In addition, any director who during the one
(1) year period prior to serving as a plan administrator, was granted Options
pursuant to the Plan, will, in accordance with Rule 16b-3, as promulgated under
the Exchange Act, be ineligible to receive an Option, unless his participation
was limited solely to participation in formula grants, an on-going broad-based
employee plan or the election to receive annual directors' fees in securities
of the Company.
Incentive Stock Options shall not be granted to consultants.
The Plan does not create a right in any Participant to
participate in the Plan, to become or remain an employee of the Company, nor
does it create a right in any Participant to have any Options granted to him or
her.
V. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Non-Qualified
Option granted hereunder shall be such amount as the Board of Directors or the
Committee, as the case may be, shall deem appropriate, but in no event less
than the par value of a Share of common stock.
The price for each Share purchasable under any Incentive
Option granted hereunder shall be such amount as the Board of Directors or the
Committee, as the case may be, shall, in its best judgment, determine to be not
less than one hundred per cent (100%) of the fair market value per Share at the
date the Option is granted; provided, however, that in the case of an Incentive
Option granted to a person who, at the time such Option is granted, owns shares
of the Company or any subsidiary corporation or parent corporation of the
Company which possess more than ten per cent (10%) of the total combined voting
power of all classes of shares of the Company or of any subsidiary corporation
or parent corporation of the Company, the purchase price for each Share shall
be such amount as the Board of Directors or the Committee, as the case may be,
in its best judgment, shall determine to be not less than one hundred ten per
cent (110%) of the fair market value per Share at the date the Option is
granted. In determining stock ownership of a Participant for any purposes under
the Plan, the rules of Section 424(d) of the Code shall be applied, and the
Board of Directors or the Committee, as the case may be, may rely on
representations of fact made to it by the Participant and believed by it to be
true.
If the Shares are listed on a national securities exchange in
the United States on any date on which the fair market value per Share is to be
determined, the fair market value per Share shall be deemed to be the average
of the high and low quotations at which such Shares
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are sold on such national securities exchange on the date such Option is
granted. If the Shares are listed on a national securities exchange in the
United States on such date, but the Shares are not traded on such date, or such
national securities exchange is not open for business on such date, the fair
market value per Share shall be determined as of the closest preceding date on
which such exchange shall have been open for business and the Shares were
traded. If the Shares are listed on more than one national securities exchange
in the United States on the date on which the fair market value per Share is to
be determined, the Board of Directors or the Committee, as the case may be,
shall determine which national securities exchange shall be used for the
purpose of determining the fair market value per Share.
For purposes of this Plan, the determination by the Board of
Directors or the Committee, as the case may be, of the fair market value of a
Share shall be conclusive.
Upon the exercise of an Option granted hereunder, the Company
shall cause the purchased Shares to be issued only when it shall have received
the full purchase price for the Shares in cash or by certified check or such
other arrangement for the satisfaction of the full purchase price as the
Committee may determine to the extent permitted by applicable law, including
but not limited to, by delivering to the Company shares of common stock of the
Company (in proper form for transfer and accompanied by all requisite stock
transfer tax stamps or cash in lieu thereof) owned by such holder free and
clear of all liens and encumbrances having a fair market value equal to the
exercise price applicable to that portion of the Option being exercised by the
delivery of such Shares. The fair market value of the stock so delivered shall
be determined by the Committee, in its sole discretion, as of the date
immediately preceding the date on which the Option is exercised, or as may be
required in order to comply with or to conform to the requirements of any
applicable laws or regulations.
VI. USE OF PROCEEDS
The cash proceeds of the sale of Shares pursuant to the Plan
are to be added to the general funds of the Company and used for its general
corporate purposes as the Board of Directors shall determine.
VII. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
Any Option shall be exercisable at such times, in such
amounts and during such period or periods as the Board of Directors or the
Committee, as the case may be, shall determine at the date of the grant of such
Option; provided, however, that an Incentive Option shall not be exercisable
after the expiration of ten (10) years from the date such Option is granted;
and provided further that, in the case of an Incentive Option granted to a
person who, at the time such Option is granted, owns stock of the Company or
any subsidiary corporation or parent corporation of the Company possessing more
than ten per cent (10%) of the total
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<PAGE>
combined voting power of all classes of stock of the Company or of any
subsidiary corporation or parent corporation of the Company, such Option shall
not be exercisable after the expiration of five (5) years from the date such
Option is granted.
Except to the extent otherwise provided under the Code, to
the extent that the aggregate fair market value of stock for which Incentive
Options are exercisable for the first time by a Participant during any calendar
year (under all stock option plans of the Company or of any parent corporation
or subsidiary corporation of the Company) exceeds one hundred thousand dollars
($100,000), such Options shall be treated as Non-Qualified Options. For
purposes of this limitation, (i) the fair market value of stock is determined
as of the time the Option is granted, and (ii) the limitation will be applied
by taking into account Options in the order in which they were granted.
Subject to the provisions of Article XVII, the Board of
Directors or the Committee, as the case may be, shall have the right to
accelerate, in whole or in part, from time to time, conditionally or
unconditionally, rights to exercise any Option granted hereunder.
To the extent that an Option is not exercised within the
period of exercisability specified therein, it shall expire as to the then
unexercised part.
In no event shall an Option granted hereunder be exercised
for a fraction of a Share.
The Committee may at any time on behalf of the Company offer
to buy out an Option previously granted, based on such terms and conditions as
the Committee shall establish and communicate to the Participant at the time
that such offer is made.
VIII. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the
optionee as to all or part of the Shares covered thereby by the giving of
written notice of the exercise thereof to the Corporate Secretary of the
Company at the principal business office of the Company, specifying the number
of shares to be purchased and specifying a business day not more than fifteen
(15) days from the date such notice is given for the payment of the purchase
price against delivery of the Shares being purchased. Subject to the terms of
Articles XIII, XV, and XVI, the Company shall cause certificates for the Shares
so purchased to be delivered to the optionee at the principal business office
of the Company, against payment of the full purchase price, on the date
specified in the notice of exercise.
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<PAGE>
IX. NON-TRANSFERABILITY OF OPTIONS
No Option granted hereunder shall be transferable, whether by
operation of law or otherwise, and any Option granted hereunder shall be
exercisable, during the lifetime of the holder, only by such holder.
X. TERMINATION OF EMPLOYMENT
Upon termination of the employment of any Participant with
the Company and all subsidiary corporations and parent corporations of the
Company, an Option previously granted to the Participant, unless otherwise
specified by the Board of Directors or the Committee, as the case may be,
shall, to the extent not theretofore exercised, terminate and become null and
void, provided that:
(a) if the Participant shall die while in the employ of
such corporation or during either the three (3)
month or one (1) year period, whichever is
applicable, specified in clause (b) below and at a
time when such Participant was entitled to exercise
an Option as herein provided, the legal
representative of such Participant, or such person
who acquired such Option by bequest or inheritance
or by reason of the death of the Participant, may,
not later than one (1) year from the date of death,
but in no event later than the expiration of the
stated term of such Option, exercise such Option,
to the extent not theretofore exercised, in respect
of any or all of such number of Shares as specified
by the Board of Directors or the Committee, as the
case may be, in such Option; and
(b) if the employment of any Participant to whom such
Option shall have been granted shall terminate by
reason of the Participant's retirement (at such age
or upon such conditions as shall be specified by
the Board of Directors), disability (as defined in
Section 22(e)(3) of the Code) or dismissal by the
employer other than for "cause" (as defined below),
and while such Participant is entitled to exercise
such Option as herein provided, such Participant
shall have the right to exercise such Option so
granted, to the extent not theretofore exercised,
in respect of any or all of such number of Shares
as specified by the Board of Directors or the
Committee, as the case may be, in such Option, at
any time up to and including (i) three (3) months
after the date of such termination of employment in
the case of termination by reason of retirement or
dismissal other than for cause, and (ii) one (1)
year after the date of termination of employment in
the case of termination by reason of retirement or
disability. Notwithstanding anything to the
foregoing to the contrary contained herein, upon
the termination without cause of any
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<PAGE>
Participant who has been granted Non-Qualified
Options pursuant to the Plan, the Board of Directors
or the Committee, as the case may be, shall have the
right, in their sole discretion (only with respect
to Non-Qualified Options granted pursuant to the
Plan), to either (i) accelerate the time period
during which a Participant may exercise all or a
part of any such Option previously granted and/or
(ii) extend the time period in which such
Participant may exercise such Option, to a period of
up to one (1) year after the date of such
Participant's termination without cause.
In no event, however, shall any person be entitled to
exercise any Option after the expiration of the period of exercisability of
such Option as specified therein.
If the Participant voluntarily terminates his or her
employment, other than by reason of his/her retirement, or is discharged for
cause, any Option granted hereunder shall, unless otherwise specified by the
Board of Directors or the Committee, as the case may be, forthwith terminate
with respect to any unexercised portion thereof.
If an Option granted hereunder shall be exercised by the
legal representative of a deceased or disabled Participant or former
Participant, or by a person who acquired an Option granted hereunder by bequest
or inheritance or by reason of death of any Participant or former Participant,
written notice of such exercise shall be accompanied by a certified copy of
letters testamentary or equivalent proof of the right of such legal
representative or other person to exercise such Option.
For the purposes of the Plan, the term "for cause" shall mean
(i) with respect to a Participant who is party to a written agreement with, or,
alternatively, participates in a compensation or benefit plan of the Company or
a subsidiary corporation or parent corporation of the Company, which agreement
or plan contains a definition of "for cause" or "cause" (or words of like
import) for purposes of termination of employment thereunder by the Company or
such subsidiary corporation or parent corporation of the Company, "for cause"
or "cause" as defined in the most recent of such agreements or plans, or (ii)
in all other cases, as determined by the Board of Directors or the Committee,
as the case may be, in its sole discretion, (a) the willful commission by a
Participant of a criminal or other act that causes or probably will cause
substantial economic damage to the Company or a subsidiary corporation or
parent corporation of the Company or substantial injury to the business
reputation of the Company or a subsidiary corporation or parent corporation of
the Company; (b) the commission by a Participant of an act of fraud in the
performance of such Participant's duties on behalf of the Company or a
subsidiary corporation or parent corporation of the Company; or (c) the
continuing willful failure of a Participant to perform the duties of such
Participant to the Company or a subsidiary corporation or parent corporation of
the Company (other than such failure resulting from the Participant's
incapacity due to physical or mental illness) after written notice thereof
(specifying the particulars thereof in reasonable detail) and a reasonable
opportunity to be heard and cure such failure are given to the Participant by
the Board of Directors. For purposes of the Plan, no act, or failure to act, on
the Participant's part shall be considered "willful" unless done or omitted to
be done by the Participant not in good faith and
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<PAGE>
without reasonable belief that the Participant's action or omission was in the
best interest of the Company or a subsidiary corporation or parent corporation
of the Company.
For the purposes of the Plan, an employment relationship
shall be deemed to exist between an individual and a corporation if, at the
time of the determination, the individual was an "employee" of such corporation
for purposes of Section 422(a) of the Code. If an individual is on military,
sick leave or other bona fide leave of absence, such individual shall be
considered an "employee" for purposes of the exercise of an Option and shall be
entitled to exercise such Option during such leave if the period of such leave
does not exceed ninety (90) days, or, if longer, so long as the individual's
right to reemployment with the corporation granting the option (or a related
corporation) is guaranteed either by statute or by contract. If the period of
leave exceeds ninety (90) days, the employment relationship shall be deemed to
have terminated on the ninety-first (91st) day of such leave, unless the
individual's right to reemployment is guaranteed by statute or contract.
A termination of employment shall not be deemed to occur by
reason of (i) the transfer of a Participant from employment by the Company to
employment by a subsidiary corporation or a parent corporation of the Company,
or (ii) the transfer of a Participant from employment by a subsidiary
corporation or a parent corporation of the Company to employment by the Company
or by another subsidiary corporation or parent corporation of the Company.
In the event of the complete liquidation or dissolution of a
subsidiary corporation, or in the event that such corporation ceases to be a
subsidiary corporation, any unexercised Options theretofore granted to any
person employed by such subsidiary corporation will be deemed cancelled unless
such person is employed by the Company or by any parent corporation or another
subsidiary corporation after the occurrence of such event. In the event an
Option is to be cancelled pursuant to the provisions of the previous sentence,
notice of such cancellation will be given to each Participant holding
unexercised Options and such holder will have the right to exercise such
Options in full (without regard to any limitation set forth or imposed pursuant
to Article VII) during the thirty (30) day period following notice of such
cancellation.
XI. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
In the event of any change in the outstanding Shares through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or other like change in capital structure of the Company, the Board of
Directors or the Committee, as the case may be, shall make such adjustment to
each outstanding Option that it, in its sole discretion, deems appropriate. The
term "Shares" after any such change shall refer to the securities, cash and/or
property then receivable upon exercise of an Option. In addition, in the event
of any such change, the Board of Directors or the Committee, as the case may
be, shall make any further adjustment as may be appropriate to the maximum
number of Shares which may be acquired under the Plan pursuant to the exercise
of Options, the maximum number of Shares which may be so acquired
B-9
<PAGE>
by one Participant and the number of Shares and price per Share subject to
outstanding Options as shall be equitable to prevent dilution or enlargement of
rights under such Options, and the determination of the Board of Directors as
to these matters shall be conclusive. Notwithstanding the foregoing, (i) each
such adjustment with respect to an Incentive Option shall comply with the rules
of Section 424(a) of the Code, and (ii) in no event shall any adjustment be
made which would render any Incentive Option granted hereunder to be other than
an "incentive stock option" for purposes of Section 422 of the Code.
XII. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or on
any subsidiary corporation or parent corporation thereof to continue the
employment of any holder of Options and it shall not impose any obligation on
the part of any holder of Options to remain in the employ of the Company or of
any subsidiary corporation or parent corporation thereof.
XIII. PURCHASE FOR INVESTMENT
Except as hereinafter provided, the Board of Directors or the
Committee, as the case may be, may require a Participant, as a condition upon
exercise of any Option granted hereunder, to execute and deliver to the Company
(a) stock powers with respect to Shares underlying a particular Option and
required to be held by a custodian, and (b) a written statement, in form
satisfactory to the Board of Directors or the Committee, as the case may be, in
which the Participant represents and warrants that Shares are being acquired
for such person's own account for investment only and not with a view to the
resale or distribution thereof. The Participant shall, at the request of the
Board of Directors or the Committee, as the case may be, be required to
represent and warrant in writing that any subsequent resale or distribution of
Shares by the Participant shall be made only pursuant to either (i) a
Registration Statement on an appropriate form under the Securities Act of 1933,
as amended (the "Securities Act"), which Registration Statement has become
effective and is current with regard to the Shares being sold, or (ii) a
specific exemption from the registration requirements of the Securities Act,
but in claiming such exemption the Participant shall, prior to any offer of
sale or sale of such Shares, obtain a prior favorable written opinion of
counsel, in form and substance satisfactory to counsel for the Company, as to
the application of such exemption thereto. The foregoing restriction shall not
apply to (i) issuances by the Company so long as the Shares being issued are
registered under the Securities Act and a prospectus in respect thereof is
current, or (ii) re-offerings of Shares by affiliates of the Company (as
defined in Rule 405 or any successor rule or regulation promulgated under the
Securities Act) if the Shares being re-offered are registered under the
Securities Act and a prospectus in respect thereof is current.
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<PAGE>
XIV. ISSUE OF CERTIFICATES, LEGENDS, PAYMENT OF EXPENSES
Upon any exercise of an Option which may be granted hereunder
and, in the case of an Option, payment of the purchase price, a certificate or
certificates for the Shares shall be issued by the Company in the name of the
person exercising the Option and shall be delivered to or upon the order of
such person.
The Company may endorse such legend or legends upon the
certificates for Shares issued pursuant to the Plan and may issue such "stop
transfer" instructions to its transfer agent in respect of such Shares as, in
its discretion, it determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act, (ii) implement the provisions of the Plan and any agreement
between the Company and the optionee or grantee with respect to such Shares, or
(iii) permit the Company to determine the occurrence of a disqualifying
disposition, as described in Section 421(b) of the Code, of Shares transferred
upon exercise of an Incentive Option granted under the Plan.
The Company shall pay all issue or transfer taxes with
respect to the issuance or transfer of Shares, as well as all fees and expenses
necessarily incurred by the Company in connection with such issuance or
transfer, except fees and expenses which may be necessitated by the filing or
amending of a Registration Statement under the Securities Act, which fees and
expenses shall be borne by the recipient of the Shares, unless such
Registration Statement under the Securities Act has been filed by the Company
for its own corporate purposes (and the Company so states) in which event the
recipient of the Shares shall bear only such fees and expenses as are
attributable solely to the inclusion of the Shares he or she receives in the
Registration Statement.
All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
XV. WITHHOLDING TAXES
The Company may require a Participant, if applicable,
exercising a Non-Qualified Option granted hereunder, or disposing of Shares
acquired pursuant to the exercise of an Incentive Option in a disqualifying
disposition (within the meaning of Section 421(b) of the Code), to reimburse
the corporation that employs such Participant for any taxes required by any
government to be withheld or otherwise deducted and paid by such corporation in
respect of the issuance or disposition of such Shares. In lieu thereof, the
corporation that employs such Participant shall have the right to withhold the
amount of such taxes from any other sums due or to become due from such
corporation to the Participant upon such terms and conditions as the Board of
Directors shall prescribe. The corporation that employs such Participant may,
in its discretion, hold the stock certificate to which such Participant is
entitled upon the exercise of an Option as security for the payment of such
withholding tax liability, until cash sufficient
B-11
<PAGE>
to pay that liability has been accumulated. In addition, at any time that the
Company becomes subject to a withholding obligation under applicable law with
respect to the exercise of a Non- Qualified Option (the "Tax Date"), except as
set forth below, a holder of a Non-Qualified Option may elect to satisfy, in
whole or in part, the holder's related personal tax liabilities (an "Election")
by (i) directing the Company to withhold from Shares issuable in the related
exercises either a specified number of Shares or Shares having a specified
value (in each case not in excess of the related personal tax liabilities),
(ii) tendering Shares previously issued pursuant to the exercise of an Option
or other Shares of the Company's common stock owned by the holder, or (iii)
combining any or all of the foregoing options in any fashion. An Election shall
be irrevocable. The withheld Shares and other Shares tendered in payment shall
be valued at their fair market value (determined in accordance with the
principles set forth in Article V of the Plan) on the Tax Date. The Board of
Directors or the Committee, as the case may be, may disapprove of any Election,
suspend or terminate the right to make Elections or provide that the right to
make Elections shall not apply to particular Shares or exercises. The Board of
Directors or the Committee, as the case may be, may impose any additional
conditions or restrictions on the right to make an Election as it shall deem
appropriate.
XVI. LISTING OF SHARES AND RELATED MATTERS
The Board of Directors or the Committee, as the case may be,
may delay any award, issuance or delivery of Shares if it determines that
listing, registration or qualification of Shares or the consent or approval of
any governmental regulatory body is necessary or desirable as a condition of,
or in connection with, the sale or purchase of Shares under the Plan, until
such listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board of Directors or the Committee, as the case may be.
XVII. AMENDMENT OF THE PLAN
The Board of Directors or the Committee, as the case may be,
may, from time to time, amend the Plan, provided that no amendment shall be
made, without the approval of the stockholders of the Company, to the extent
required by Rule 16b-3 or for the exception for performance-based compensation
under Section 162(m) of the Code, that will (i) increase the total number of
Shares reserved for Options under the Plan (other than an increase resulting
from an adjustment provided for in Article XI), (ii) reduce the exercise price
of any Option granted hereunder, (iii) modify the provisions of the Plan
relating to eligibility, or (iv) materially increase the benefits accruing to
Participants under the Plan or extend the maximum option period under Section
VII. The Board of Directors or the Committee, as the case may be, shall be
authorized to amend the Plan and the Options granted thereunder to permit the
Incentive Options granted thereunder to qualify as incentive stock options
within the meaning of Section 422 of the Code. The rights and obligations under
any Option granted before amendment of the
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Plan or any unexercised portion of such Option shall not be adversely affected
by amendment of the Plan or Option without the consent of the holder of such
Option.
XVIII. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors or the Committee, as the case may be,
may at any time suspend or terminate the Plan. The Plan, unless sooner
terminated under Article XXI or by action of the Board of Directors, shall
terminate at the close of business on the Termination Date. Options may not be
granted while the Plan is suspended or after it is terminated. Rights and
obligations under any Option granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the Plan, except upon the
consent of the person to whom the Option was granted. The power of the Board of
Directors to construe and administer any Options granted prior to the
termination or suspension of the Plan under Article III nevertheless shall
continue after such termination or during such suspension.
XIX. GOVERNING LAW
The Plan and such Options as may be granted thereunder and
all related matters shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware from time to time obtaining
or such other jurisdiction as the Company may become reincorporated under.
XX. PARTIAL INVALIDITY
The invalidity or illegibility of any provision hereof shall
not be deemed to affect the validity of any other provision.
XXI. EFFECTIVE DATE
The Plan shall become effective upon its approval by the
Stockholders of the Company.
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<PAGE>
This Proxy is Solicited by the Board of Directors of
Armor Holdings, Inc.
------------------
ANNUAL MEETING
JUNE 12, 1997
The undersigned hereby appoints Jonathan M. Spiller and Warren B. Kanders as
proxies to represent the undersigned, with full power of substitution, at the
Annual Meeting of Stockholders of Armor Holdings, Inc., to be held on June 12,
1996 at 10:00 A.M., New York City time, at The Metropolitan Club, 1 East 60th
Street, New York, New York 10022 and any adjournments and postponements
thereof:
1. ELECTION OF -- FOR all nominees listed below
DIRECTORS (except as marked to the contrary below)
-- WITHHOLD AUTHORITY to vote for all nominees listed below
Warren B. Kanders Burtt R. Ehrlich
Thomas W. Strauss Jonathan M. Spiller
Nicolas Sokolow Richard C. Bartlett
Alair A. Townsend
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through or otherwise strike the
nominee's name in the list above.
2. To consider and vote upon a proposal to restructure the Company into a
holding company and to transfer the assets of the Company into a
wholly-owned subsidiary to effect the holding company structure, as
described herein (Proposal 2);
|_| FOR |_| AGAINST |_| WITHHOLD AUTHORITY TO VOTE
3. To consider and vote upon a proposal to approve an amendment to the
Company's Non- Employee Directors Stock Option Plan to increase by
150,000 shares, the total number of shares of the Company's common
stock, $.01 par value per share, that may be awarded under such plan
(Proposal 3);
|_| FOR |_| AGAINST |_| WITHHOLD AUTHORITY TO VOTE
4. To consider and vote upon a proposal to approve an amendment to the
Company's 1996 Stock Option Plan to increase by 250,000 shares, the
total number of shares of the Company's common stock $.01 par value
per share, that may be awarded under such plan (Proposal 4); and
|_| FOR |_| AGAINST |_| WITHHOLD AUTHORITY TO VOTE
5. To consider and vote upon a resolution ratifying the selection of
Deloitte & Touche LLP as the Company's independent certified public
accountants for the fiscal year ending December 27, 1997 (Proposal 5).
|_| FOR |_| AGAINST |_| WITHHOLD AUTHORITY TO VOTE
In their discretion, the Proxies are authorized to vote upon such
other business that may properly come before the meeting.
<PAGE>
THIS BALLOT, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. UNLESS OTHERWISE SPECIFIED, THE SHARES WILL BE
VOTED "FOR" EACH PROPOSAL.
Dated:_____________ ____________________________________ __________________
Signatures of Stockholder(s)
NOTE: Signature should agree with name on stock certificate as printed
thereon. Executors, administrators, trustees and other fiduciaries
should so indicate when signing.
PLEASE DATE, SIGN AND RETURN THIS PROXY. THANK YOU.
