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UNITED STATES ---------------------------
SECURITIES AND EXCHANGE COMMISSION QMB APPROVAL
WASHINGTON, D.C. 20549 ---------------------------
QMB Number: 3235-0145
SCHEDULE 13D Expires: December 31, 1997
Estimated average burden
UNDER THE SECURITIES EXCHANGE ACT OF 1934 hours per response....14.90
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(AMENDMENT NO. 2)*
ARMOR HOLDINGS, INC.
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- -------------------------------------------------------------------------------
(Title of Class of Securities)
042260109
- -------------------------------------------------------------------------------
(CUSIP Number)
Warren B. Kandera
Kanders Florida Holdings, Inc.
13386 International Parkway, Jacksonville, FL 32218
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
July 30, 1997
- -------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If this filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial owenrship of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filled
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 042260109 Page 2 of 8 Pages
===============================================================================
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Kanders Florida Holdings, Inc.
IRS I.D. No. 58-2210921
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) |X|
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCES OF FUNDS
Not applicable.
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e)
[ ]
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
UNITS 3,637,178
BENEFICIALLY -------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 0
PERSON WITH -------------------------------------------------------
9. SOLE DISPOSITIVE POWER
3,637,178
--------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,637,178
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
[X]
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.7%
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
===============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
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Page 3 of 6 Pages
-----------------
This Amendment No. 2 to Schedule 13D relates to the Schedule
13D, dated January 26, 1996 (the "Schedule 13D") filed by Kanders Florida
Holdings, Inc. ("KFH") in connection with the shares of common stock, par
value $.01 per share (the "Common Stock"), of Armor Holdings, Inc., a Delaware
corporation (the "Company").
This Amendment No. 2 to Schedule 13D amends the Schedule
13D, as amended by Amendment No. 1 thereto dated December 31, 1996,
by further amending the disclosures contained in Items 1, 5 and 6.
ITEM 1. SECURITY AND ISSUER
Item 1 of the Schedule 13D is hereby deleted in its entirety
and the following is substituted in lieu thereof:
This Statement on Schedule 13D (the "Statement") relates to
the shares of Common Stock, par value $.01 per share (the "Common Stock"), of
Armor Holdings, Inc. (the "Issuer"). The executive offices of the Issuer are
located at 13386 International Parkway, Jacksonville, Florida 32218.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Paragraph 1 of Item 5 of the Schedule 13D is hereby deleted
in its entirety and the following is substituted in lieu thereof:
KFH is the owner of 3,637,178 shares of Common Stock. The
3,637,178 shares of Common Stock of the Company that are owned by KFH
constitute approximately 22.7% of the outstanding shares of Common Stock of
the Company. On July 30, 1997, the Company completed an underwritten public
offering of 4,000,000 shares of its Common Stock at a price of $10.125 per
share, less underwriting discounts and commissions of $.6075 per share. As
part of such offering, on July 30, 1997, KFH completed the sale of 495,859
shares of Common Stock as part of the underwriters' over-allotment option (the
"KFH Sale"). Also as part of the underwriters' over-allotment option, Warren
B. Kanders, the President, sole director and sole shareholder of KFH,
completed the sale of 29,141 shares of Common Stock on July 30, 1997,
representing all of the shares of Common Stock owned individually by Mr.
Kanders. In addition, 300,000 shares of Common Stock are owned by the Kanders
Florida Holdings, Inc. 1996 Charitable Remainder Unitrust (the "Trust").
Warren B. Kanders is a trustee of the Trust, and in such capacity has the
power to vote or direct the vote and to dispose or direct the disposition of
the shares of Common Stock owned by the Trust. As President, sole director and
sole shareholder of KFH and as a trustee of the Trust, Mr. Kanders may be
deemed to be the beneficial owner of the shares of Common
<PAGE>
---------------------
Page 4 of 6 Pages
---------------------
Stock that are owned by KFH and the Trust. Mr. Kanders disclaims beneficial
ownership of the shares of Common Stock owned by the Trust. The 3,937,178
shares of Common Stock collectively owned by KFH and the Trust constitute
approximately 24.6% of the outstanding shares of Common Stock of the Company.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE COMPANY
Item 6 of the Schedule 13D is hereby amended by adding the
following at the end thereof:
Pursuant to the terms of the agreement entered into between
KFH and Mr. Spiller, on July 30, 1997, Mr. Spiller received the net proceeds
from the sale of 225,000 shares of Common Stock sold as part of the KFH Sale
(the "Spiller Shares"), reduced by the Spiller Acquisition Cost relating to
such shares of Common Stock so sold by KFH. Such net proceeds amounted to
$1,932,142.50. In connection therewith, Mr. Spiller agreed to indemnify KFH
from any tax liabilities arising from the sale of the Spiller Shares. Mr.
Spiller also agreed to indemnify KFH and Mr. Kanders from any losses, claims,
damages, judgments, liabilities and expenses suffered by KFH and/or Mr.
Kanders arising under the Underwriting Agreement between the Company, Dillon,
Read & Co. Inc., as representative of the several underwriters, KFH, Mr.
Kanders and Richmont Capital Partners I, L.P., to the extent of the net
proceeds received by Mr. Spiller pursuant to the sale of the Spiller Shares.
On August 15, 1997, KFH amended the terms of the Loan with
NationsBank by increasing the available credit thereunder to $16,000,000,
reducing the interest rate to LIBOR plus 1% and extending the maturity date of
the Loan to August 15, 1998. Interest is payable quarterly, commencing
September 15, 1997, and continuing on the same day of each successive quarter,
with a final payment of all unpaid interest due at maturity of the Loan. KFH
also pledged an additional 404,141 shares of Common Stock as security for the
Loan, bringing the aggregate number of shares of Common Stock pledged as
security for the Loan to 3,600,178.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Item 7 of the Schedule 13D is hereby amended by adding the
following as exhibits thereto:
4. Tax Indemnification Agreement, dated July 29, 1997,
between KFH and Mr. Spiller.
5. Indemnification and Contribution Agreement, dated
July 25, 1997, between KFH and Mr. Spiller.
<PAGE>
---------------------
Page 5 of 6 Pages
---------------------
6. Promissory Note, dated August 15, 1997, issued by
KFH to NationsBank.
7. Pledge Agreement, dated August 15, 1997, between KFH
and NationsBank.
8. Pledge Agreement, dated August 15, 1997, between KFH
and NationsBank.
<PAGE>
---------------------
Page 6 of 6 Pages
---------------------
SIGNATURE
The undersigned, after reasonable inquiry and to the best of
its knowledge and belief, certifies that the information set forth in this
statement is true, complete and correct.
Dated: August 20, 1997
KANDERS FLORIDA HOLDINGS, INC.
By:/s/ Warren B. Kanders
-----------------------------
Warren B. Kanders
President
<PAGE>
EXHIBIT 4
KANDERS FLORIDA HOLDINGS, INC.
C/O 13386 INTERNATIONAL PARKWAY
JACKSONVILLE, FLORIDA 32218
July 29, 1997
Mr. Jonathan M. Spiller
c/o Armor Holdings, Inc.
13386 International Parkway
Jacksonville, Florida 32218
Re: Tax Indemnification with respect to
Letter Agreement dated January 18, 1996
Dear Jonathan:
The following shall set forth the understanding that we have
reached with respect to certain tax consequences that may arise in connection
with carrying out the provisions of the Letter Agreement among us, dated
January 18, 1996 (the "Agreement"). Unless otherwise defined herein,
capitalized terms used herein shall have the meanings given to such terms in
the Agreement.
We have agreed as follows:
1. In the event that KFH sells Common Shares, and as a
result of such sale, Spiller is entitled to receive
a portion of the net proceeds thereof or a stock
certificate representing a portion of such Common
Shares, all as more fully set forth in the
Agreement, Spiller shall hold KFH harmless and
indemnify KFH for any and all capital gains or
other tax liabilities assessed against KFH by the
Internal Revenue Service or by any state or local
taxing authority (a "Taxing Authority") including,
but not limited to, interest, penalties, reasonable
attorneys' fees and related disbursements and other
expenses incurred by KFH in connection with such
tax liabilities or claims (collectively, the "Tax
Liabilities"), which are attributable to such sale
by KFH of the Common Shares. All such Tax
Liabilities shall be paid by Spiller to KFH within
ten (10) days of the date on which KFH is required
to pay any such Tax Liability and after notice by
KFH to Spiller.
<PAGE>
Mr. Jonathan M. Spiller
July 29, 1997
Page 2
2. This letter agreement shall be governed in
accordance with the laws of the State of New York,
without giving effect to its conflict of laws
rules.
If the foregoing conforms to your understanding, kindly
acknowledge such by signing below.
Very truly yours,
KANDERS FLORIDA HOLDINGS, INC.
By:/s/ Warren B. Kanders
---------------------------
Warren B. Kanders
President
ACCEPTED AND AGREED TO:
/s/ Jonathan M. Spiller
- -----------------------------------
Jonathan M. Spiller
<PAGE>
EXHIBIT 5
JONATHAN M. SPILLER
C/O 13386 INTERNATIONAL PARKWAY
JACKSONVILLE, FLORIDA 32218
July 25, 1997
Mr. Warren B. Kanders
Kanders Florida Holdings, Inc.
c/o 13386 International Parkway
Jacksonville, Florida 32218
Re: Indemnification and Contribution Pursuant
to Underwriting Agreement
Gentlemen:
Reference is hereby made to that certain
Underwriting Agreement, dated July 25, 1997, among Dillon, Read & Co. Inc.,
Equitable Securities Corporation and Stephens Inc., as Managing Underwriters
of the several underwriters named therein, Armor Holdings, Inc., Warren B.
Kanders, Kanders Florida Holdings, Inc. and Richmont Capital Partners I, L.P.
(the "Underwriting Agreement"). Capitalized terms used herein shall have their
respective meanings as set forth in the Underwriting Agreement.
In the event that either of Warren B. Kanders or
Kanders Florida Holdings, Inc. is required to indemnify the Underwriters
pursuant to the provisions of the Underwriting Agreement, or is required to
contribute to any of the losses, claims, damages, judgments, liabilities and
expenses (including the fees and expenses of counsel and other expenses in
connection with investigating, defending or settling any action or claim)
(collectively, "Losses") suffered by any of the Underwriters, or in the event
that Warren B. Kanders or Kanders Florida Holdings, Inc. suffers any Losses in
connection with any breach of a representation, warranty, covenant or
agreement contained in the Underwriting Agreement, then the undersigned,
Jonathan M. Spiller, hereby agrees to bear a pro rata portion of any such
Losses borne by Warren B. Kanders and/or Kanders Florida Holdings, Inc.,
including any such amounts incurred by way of indemnification or contribution
as set forth in the Underwriting Agreement, in an amount equal to 42.86% of
such Losses that are incurred by Warren B. Kanders and/or Kanders Florida
Holdings, Inc.
Very truly yours,
/s/Jonathan M. Spiller
Jonathan M. Spiller
<PAGE>
NATIONSBANK, N. A.
PROMISSORY NOTE
Date August 15, 1997 []New [X]Renewal of Note 273 Amount $16,000,000.00
Maturity Date August 15, 1998
===============================================================================
Bank: Borrower:
NationsBank, N.A.
Banking Center: Kanders Florida Holdings, Inc.
2100 S. Ocean Boulevard, Suite 302N
Private Client Group Palm Beach, Florida 33480
767 5th Avenue
New York, New York 10153
County: County:
===============================================================================
FOR VALUE RECEIVED, the undersigned Borrower unconditionally (and jointly and
severally, if more than one) promises to pay to the order of Bank, its
successors and assigns, without setoff, at its offices indicated at the
beginning of this Note, or at such other place as may be designated by Bank,
the principal amount of Sixteen Million and 00/100 Dollars ($16,000,000.00),
or so much thereof as may be advanced from time to time in immediately
available funds, together with interest computed daily on the outstanding
principal balance hereunder, at an annual interest rate, and in accordance
with the payment schedule, indicated below.
[THIS NOTE CONTAINS SOME PROVISIONS PRECEDED BY BOXES. IF A BOX IS MARKED, THE
PROVISION APPLIES TO THIS TRANSACTION; IF IT IS NOT MARKED, THE PROVISION DOES
NOT APPLY TO THIS TRANSACTION.]
1. RATE.
OTHER. The rate shall be the floating and fluctuating rate of interest
determined by the daily London Interbank Offered Rate (expressed as a
percentage) for thirty (30) day Dollar deposits as quoted by the Bank for 11
o'clock a.m. (London time) adjusted for required reserves and FDIC premiums
(the "Libo Rate") plus one percent (1.00%) per annum. Each time the Libo Rate
changes, the per annum rate of interest on the Note shall change immediately
and contemporaneously with such change in the Libo Rate.
Notwithstanding any provision of this Note, Bank does not intend to charge and
Borrower shall not be required to pay any amount of interest or other charges
in excess of the maximum permitted by the applicable law of the State of North
Carolina; if any higher rate ceiling is lawful, then that higher rate ceiling
shall apply. Any payment in excess of such maximum shall be refunded to
Borrower or credited against principal, at the option of Bank.
2. ACCRUAL METHOD. Unless otherwise indicated, interest at the Rate set forth
above will be calculated by the 365/360 day method (a daily amount of interest
is computed for a hypothetical year of 360 days; that amount is multiplied by
the actual number of days for which any principal is outstanding hereunder).
If interest is not to be computed using this method, the method shall be:
n/a.
3. RATE CHANGE DATE. Any Rate based on a fluctuating index or base rate will
change, unless otherwise provided, each time and as of the date that the index
or base rate changes. If the Rate is to change on any other date or at any
other interval, the change shall be: n/a. In the event any index is
discontinued, Bank shall substitute an index determined by Bank to be
comparable, in its sole discretion.
4. PAYMENT SCHEDULE. All payments received hereunder shall be applied first to
the payment of any expense or charges payable hereunder or under any other
loan documents executed in connection with this Note, then to interest due and
payable, with the balance applied to principal, or in such other order as Bank
shall determine at its option.
SINGLE PRINCIPAL PAYMENT. Principal shall be paid in full in a single payment
on August 15, 1998. Interest thereon shall be paid quarterly, commencing on
September 15, 1997, and continuing on the same day of each successive month,
quarter or other period (as applicable) thereafter, with a final payment of
all unpaid interest at the stated maturity of this Note.
5. REVOLVING FEATURE.
[X] Borrower may borrow, repay and reborrow hereunder at any time, up to a
maximum aggregate amount outstanding at any one time equal to the principal
amount of this Note, provided, that Borrower is not in default under any
provision of this Note, any other documents executed in connection with this
Note, or any other note or other loan documents now or hereafter executed in
connection with any other obligation of Borrower to Bank, and provided that
the borrowings hereunder do not exceed any borrowing base or other limitation
on borrowings by Borrower. Bank shall incur no liability for its refusal to
advance funds based upon its determination that any conditions of such further
advances have not been met. In the absence of fraud, bad faith, or mistake,
Bank records of the amounts borrowed from time to time shall be conclusive
proof thereof.
[] UNCOMMITTED FACILITY. Borrower acknowledges and agrees that,
notwithstanding any provisions of this Note or any other documents
executed in connection with this Note, Bank has no obligation to make any
advance, and that all advances are at the sole discretion of Bank.
[] OUT-OF-DEBT PERIOD. For a period of at least consecutive days during
[] each fiscal year, [] any consecutive 12-month period, Borrower shall
fully pay down the balance of this Note, so that no amount of principal
or interest and no other obligation under this Note remains outstanding.
1
<PAGE>
6. AUTOMATIC PAYMENT.
[] Borrower has elected to authorize Bank to effect payment of sums due under
this Note by means of debiting Borrower's account number . This
authorization shall not affect the obligation of Borrower to pay such sums
when due, without notice, if there are insufficient funds in such account to
make such payment in full on the due date thereof, or if Bank fails to debit
the account.
7. WAIVERS, CONSENTS AND COVENANTS. Borrower, any indorser, or guarantor
hereof or any other party hereto (individually an "Obligor" and collectively
"Obligors") and each of them jointly and severally: (a) waive presentment,
demand, protest, notice of demand, notice of intent to accelerate, notice of
acceleration of maturity, notice of protest, notice of nonpayment, notice of
dishonor, and any other notice required to be given under the law to any
Obligor in connection with the delivery, acceptance, performance, default or
enforcement of this Note, any indorsement or guaranty of this Note, or any
other documents executed in connection with this Note (including without
limitation those certain Pledge Agreements, Collateral Assignment of Interests
or Agreement to Maintain Liquid Assets referred to below in Term 10) or any
other note or other loan documents now or hereafter executed in connection
with any obligation of Borrower to Bank (the "Loan Documents"); (b) consent to
all delays, extensions, renewals or other modifications of this Note or the
Loan Documents, or waivers of any term hereof or of the Loan Documents, or
release or discharge by Bank of any of Obligors, or release, substitution or
exchange of any security for the payment hereof, or the failure to act on the
part of Bank, or any indulgence shown by Bank (without notice to or further
assent from any of Obligors), and agree that no such action, failure to act or
failure to exercise any right or remedy by Bank shall in any way affect or
impair the obligations of any Obligors or be construed as a waiver by Bank of,
or otherwise affect, any of Bank's rights under this Note, under any
indorsement or guaranty of this Note or under any of the Loan Documents; and
(c) agree to pay, on demand, all costs and expenses of collection or defense
of this Note or of any indorsement or guaranty hereof and/or the enforcement
or defense of Bank's rights with respect to, or the administration,
supervision, preservation, protection of, or realization upon, any property
securing payment hereof, including, without limitation, reasonable attorney's
fees, including fees related to any suit, mediation or arbitration proceeding,
out of court payment agreement, trial, appeal, bankruptcy proceedings or other
proceeding.
8. PREPAYMENTS. Prepayments may be made in whole or in part at any time on any
loan for which the Rate is based on the Prime Rate. All prepayments of
principal shall be applied in the inverse order of maturity, or in such other
order as Bank shall determine in its sole discretion. Except as may be
prohibited by applicable law, no prepayment of any other loan shall be
permitted without the prior written consent of Bank. Notwithstanding such
prepayment prohibition, if there is a prepayment of any such loan, whether by
consent of Bank, or because of acceleration or otherwise, Borrower shall,
within 15 days of any request by Bank, pay to Bank, unless prohibited by
applicable law, any loss or expense which Bank may incur or sustain as a
result of such prepayment. For the purposes of calculating the amounts owed
only, it shall be assumed that Bank actually funded or committed to fund the
loan through the purchase of an underlying deposit in an amount and for a term
comparable to the loan, and such determination by Bank shall be conclusive,
absent a manifest error in computation.
9. DELINQUENCY CHARGE. To the extent permitted by law, a delinquency charge
may be imposed in an amount not to exceed four percent (4%) of the unpaid
portion of any payment that is more than fifteen days late. Unless the terms
of this Note call for repayment of the entire balance of this Note (both
principal and interest) in a single payment and not for installments of
interest or principal and interest, the 4% delinquency charge may be imposed
not only with respect to regular installments of principal or interest or
principal and interest, but also with respect to any other payment in default
under this Note (other than a previous delinquency charge), including without
limitation a single payment of principal due at the maturity of this Note. In
the event any installment, or portion thereof, is not paid in a timely manner,
subsequent payments will be applied first to the past due balance (which shall
not include any previous delinquency charges), specifically to the oldest
maturing installment, and a separate delinquency charge will be imposed for
each payment that becomes due until the default is cured.
10. EVENTS OF DEFAULT. The following are events of default hereunder: (a) the
failure to pay or perform any obligation, liability or indebtedness of any
Obligor to Bank, or to any affiliate or subsidiary of NationsBank Corporation,
whether under this Note or any Loan Documents, as and when due (whether upon
demand, at maturity or by acceleration, including, without limitation, the
failure of Borrower to comply with the provisions of those certain Collateral
Maintenance Agreements or that certain Agreement to Maintain Liquid Assets
both of even date herewith between Bank and Warren B. Kanders); (b) the
failure to pay or perform any other material obligation, liability or
indebtedness of any Obligor to any other party; (c) the death of any Obligor
(if an individual); (d) the resignation or withdrawal of any partner or a
material owner/Guarantor of Borrower, as determined by Bank in its sole
discretion; (e) the commencement of a proceeding against any Obligor for
dissolution or liquidation, the voluntary or involuntary termination or
dissolution of any Obligor or the merger or consolidation of any Obligor with
or into another entity; (f) the insolvency of, the business failure of, the
appointment of a custodian, trustee, liquidator or receiver for or for any of
the property of, the assignment for the benefit of creditors by, or the filing
of a petition under bankruptcy, insolvency or debtor's relief law or the
filing of a petition for any adjustment of indebtedness, composition or
extension by or against any Obligor; (g) the determination by Bank that any
representation or warranty made to Bank by any Obligor in any Loan Documents
or otherwise is or was, when it was made, untrue or misleading in any material
respect; (h) the failure of any Obligor to timely deliver such financial
statements, including tax returns, other statements of condition or other
information, as Bank shall reasonably request from time to time; (i) the entry
of a judgment against any Obligor which Bank deems to be of a material nature,
in Bank's sole discretion; (j) the seizure or forfeiture of, or the issuance
of any writ of possession, garnishment or attachment, or any turnover order
for any property of any Obligor; (k) the determination by Bank in good faith
that it is insecure for any reason; (l) the determination by Bank that a
material adverse change has occurred in the financial condition of any
Obligor; or (m) the failure of Borrower's business to comply with any material
law or regulation controlling its operation, the failure to comply with which
would have a material adverse consequence; or (n) the occurrence of an Event
of Default under those certain Pledge Agreements of even date herewith from
Borrower to Bank or that certain Collateral Assignment of Interests or
Agreement to Maintain Liquid Assets also of even date herewith from Warren B.
Kanders.
11. REMEDIES UPON DEFAULT. Whenever there is a default under this Note (a) the
entire balance outstanding hereunder and all other obligations of any Obligor
to Bank (however acquired or evidenced) shall, at the option of Bank, become
immediately due and payable and any obligation of Bank to permit further
borrowing under this Note shall immediately cease and terminate, and/or (b) to
the extent permitted by law, the Rate of interest on the unpaid principal
shall be increased at Bank's discretion up to the maximum rate allowed by law,
or if none, 25% per annum (the "Default Rate"). The provisions herein for a
Default Rate and a delinquency charge shall not be deemed to extend the time
for any payment hereunder or to constitute a "grace period" giving Obligors a
right to cure any default. At Bank's option, any accrued and unpaid interest,
fees or charges may, for purposes of computing and accruing interest on a
daily basis after the due date of the Note or any installment thereof, be
deemed to be a part of the principal balance, and interest shall accrue on a
daily compounded basis after such date at the Default Rate provided in this
Note until the entire outstanding balance of principal and interest is paid in
full. Bank is hereby authorized at any time to set off and charge
2
<PAGE>
against any deposit accounts of any Obligor, as well as any money,
instruments, securities, documents, chattel paper, credits, claims, demands,
income and any other property, rights and interests of any Obligor which at
any time shall come into the possession or custody or under the control of
Bank or any of its agents, affiliates or correspondents, without notice or
demand, any and all obligations due hereunder. Additionally, Bank shall have
all rights and remedies available under each of the Loan Documents (including
without limitation the Pledge Agreements and Collateral Assignment of
Interests referred to above in Term 10), as well as all rights and remedies
available at law or in equity.
12. NON-WAIVER. The failure at any time of Bank to exercise any of its options
or any other rights hereunder shall not constitute a waiver thereof, nor shall
it be a bar to the exercise of any of its options or rights at a later date.
All rights and remedies of Bank shall be cumulative and may be pursued singly,
successively or together, at the option of Bank. The acceptance by Bank of any
partial payment shall not constitute a waiver of any default or of any of
Bank's rights under this Note. No waiver of any of its rights hereunder, and
no modification or amendment of this Note, shall be deemed to be made by Bank
unless the same shall be in writing, duly signed on behalf of Bank; each such
waiver shall apply only with respect to the specific instance involved, and
shall in no way impair the rights of Bank or the obligations of Obligor to
Bank in any other respect at any other time.
13. APPLICABLE LAW, VENUE AND JURISDICTION. This Note and the rights and
obligations of Borrower and Bank shall be governed by and interpreted in
accordance with the law of the State of North Carolina. In any litigation in
connection with or to enforce this Note or any indorsement or guaranty of this
Note or any Loan Documents, Obligors, and each of them, irrevocably consent to
and confer personal jurisdiction on the courts of the State of North Carolina
or the United States located within the State of North Carolina and expressly
waive any objections as to venue in any such courts. Nothing contained herein
shall, however, prevent Bank from bringing any action or exercising any rights
within any other state or jurisdiction or from obtaining personal jurisdiction
by any other means available under applicable law.
14. PARTIAL INVALIDITY. The unenforceability or invalidity of any provision of
this Note shall not affect the enforceability or validity of any other
provision herein and the invalidity or unenforceability of any provision of
this Note or of the Loan Documents to any person or circumstance shall not
affect the enforceability or validity of such provision as it may apply to
other persons or circumstances.
15. BINDING EFFECT. This Note shall be binding upon and inure to the benefit
of Borrower, Obligors and Bank and their respective successors, assigns, heirs
and personal representatives, provided, however, that no obligations of
Borrower or Obligors hereunder can be assigned without prior written consent
of Bank.
16. CONTROLLING DOCUMENT. To the extent that this Note conflicts with or is in
any way incompatible with any other Loan Document concerning this obligation,
the Note shall control over any other document, and if the Note does not
address an issue, then each other document shall control to the extent that it
deals most specifically with an issue.
17. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY
BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL
ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY
COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY
BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT, AGREEMENT
OR DOCUMENT AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION,
THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS
WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT
OR DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY
12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT
THE RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT
LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES
SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE
APPOINTMENT OF A RECEIVER. BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE
UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE,
DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO
THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP
REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF
ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS
OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
BORROWER REPRESENTS TO BANK THAT THE PROCEEDS OF THIS LOAN ARE TO BE USED
PRIMARILY FOR BUSINESS, COMMERCIAL OR AGRICULTURAL PURPOSES. BORROWER
ACKNOWLEDGES HAVING READ AND UNDERSTOOD, AND AGREES TO BE BOUND BY, ALL TERMS
AND CONDITIONS OF THIS NOTE AND HEREBY EXECUTES THIS NOTE UNDER SEAL AS OF THE
DATE HERE ABOVE WRITTEN.
3
<PAGE>
NOTICE OF FINAL AGREEMENT. THIS WRITTEN PROMISSORY NOTE REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
CORPORATE OR PARTNERSHIP BORROWER
Kanders Florida Holdings, Inc.
By: /s/ Warren B. Kanders
------------------------ (Seal)
Name: Warren B. Kanders
Title: President
---------------------------
Attest (If Applicable)
[Corporate Seal]
4
<PAGE>
NATIONSBANK, N. A. Customer# 955491
Date: August 15, 1997
PLEDGE AGREEMENT
<TABLE>
<CAPTION>
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<S> <C>
BANK/SECURED PARTY: PLEDGOR(S)/DEBTOR(S):
NationsBank, N.A.
Banking Center:
Kanders Florida Holdings, Inc.
Private Client Group 2100 S. Ocean Boulevard, Suite 302N
767 5th Avenue Palm Beach, Florida 33480
New York, New York 10153
County: County:
(Street address including county)
(Name and street address including county)
==================================================================================
Pledgor/Debtor is: Corporation
Address is Pledgor's/Debtor's:
==================================================================================
</TABLE>
1. SECURITY INTEREST. For good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor/Debtor (hereinafter
referred to as "Pledgor") pledges, assigns and grants to Bank a security
interest and lien in the Collateral (hereinafter defined) to secure the
payment and the performance of the Obligation (hereinafter defined).
2. COLLATERAL. The security interest is granted in the following collateral
(the "Collateral"):
A. DESCRIPTION OF COLLATERAL.
BROKERAGE ACCOUNT: Securities and/or commodities account(s) number PSA
041319 (the "Account") held by NationsBanc Investments, Inc. ("Broker")
pursuant to the terms of any agreement for custody, investment management,
investment advisory or similar services between Broker and Pledgor, together
with all property now or hereafter held in the Account, specifically including
but not limited to all investment property, documents, instruments, general
intangibles, certificated and uncertificated securities, securities in
book-entry form, commodity contracts, mutual funds, U.S. government and state
obligations, deposit accounts and cash.
B. PROCEEDS. All additions, substitutes and replacements for and
proceeds of the above Collateral (including all income and benefits resulting
from any of the above, such as dividends payable or distributable in cash,
property or stock; interest, premium and principal payments; redemption
proceeds and subscription rights; and shares or other proceeds of conversions
or splits of any securities in the Collateral). Any investment property and/or
securities received by Pledgor, which shall comprise such additions,
substitutes and replacements for, or proceeds of, the Collateral, shall be
held in trust for Bank and shall be delivered immediately to Bank. Any cash
proceeds shall be held in trust for Bank and upon request shall be delivered
immediately to Bank.
3. OBLIGATION.
A. DESCRIPTION OF OBLIGATION. The following obligations ("Obligation")
are secured by this Agreement:
I. PROMISSORY NOTE: All debt arising under promissory note dated
August 15, 1997 in the principal face amount of $16,000,000.00 executed by
Kanders Florida Holdings, Inc. payable to the order of NationsBank, N.A., and
any and all renewals, extensions and rearrangements thereof;
II. All costs and expenses incurred by Bank, including reasonable
attorney's fees, to obtain, preserve, perfect , enforce and defend this
Agreement and maintain, preserve, collect and realize upon the Collateral,
together with interest thereon at the highest rate allowed by law, or if none,
25% per annum;
III. All amounts which may be owed to Bank pursuant to all other loan
documents executed in connection with the indebtedness described in subpart i.
above.
In the event any amount paid to Bank on any Obligation is subsequently
recovered from Bank in or as a result of any bankruptcy, insolvency or
fraudulent conveyance proceeding involving an obligor of the Obligation other
than Pledgor, Pledgor shall be liable to Bank for the amounts so recovered up
to the fair market value of the Collateral whether or not the Collateral has
been released or the security interest terminated. In the event the Collateral
has been released or the security interest terminated, the fair market value
of the Collateral shall be determined, at Bank's option, as of the date the
Collateral was released, the security interest terminated, or said amounts
were recovered.
B. USE OF PROCEEDS. The proceeds of any indebtedness or obligation
secured by the Collateral WILL NOT BE used directly or indirectly to purchase
or carry any "margin stock" as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System, or extend credit to or
invest in other parties for the purpose of purchasing or carrying any such
"margin stock," or to reduce or retire any indebtedness incurred for such
purpose or otherwise in a manner which would violate Regulations G, T or U.
4. PLEDGOR'S WARRANTIES. Pledgor hereby represents and warrants to Bank
as follows:
A. FINANCING STATEMENTS. Except as may be noted by schedule attached
hereto and incorporated herein by reference, no financing statement covering
the Collateral is or will be on file in any public office, except the
financing statements relating to this security interest, and no security
interest, other than the one herein created, has attached or been perfected in
the Collateral or any part thereof.
B. OWNERSHIP. Pledgor owns, or will use the proceeds of any loans by Bank
to become the owner of, the Collateral free from any setoff, claim,
restriction, lien, security interest or encumbrance except liens for taxes not
yet due and payable and the security interest hereunder.
C. POWER AND AUTHORITY. Pledgor has full power and authority to make this
Agreement, and all necessary consents and approvals of any persons, entities,
governmental or regulatory authorities and securities exchanges have been
obtained to effectuate the validity of this Agreement.
5. PLEDGOR'S COVENANTS. Until full payment and performance of all of the
Obligation and termination or expiration of any obligation or commitment of
Bank to make advances or loans to Pledgor, unless Bank otherwise consents in
writing:
A. OBLIGATION AND THIS AGREEMENT. Pledgor shall perform all of its
agreements herein and in any other agreements between it and Bank.
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<PAGE>
B. OWNERSHIP OF COLLATERAL. Pledgor shall defend the Collateral against
all claims and demands of all persons at any time claiming any interest
therein adverse to Bank. Pledgor shall keep the Collateral free from all liens
and security interests except those for taxes not yet due and payable and the
security interest hereby created.
C. BANK'S COSTS. Pledgor shall pay all costs necessary to obtain,
preserve, perfect, defend and enforce the security interest created by this
Agreement, collect the Obligation, and preserve, defend, enforce and collect
the Collateral, including but not limited to taxes, assessments, reasonable
attorney's fees, legal expenses and expenses of sales. Whether the Collateral
is or is not in Bank's possession, and without any obligation to do so and
without waiving Pledgor's default for failure to make any such payment, Bank
at its option may pay any such costs and expenses and discharge encumbrances
on the Collateral, and such payments shall be a part of the Obligation and
bear interest at the rate set out in the Obligation. Pledgor agrees to
reimburse Bank on demand for any costs so incurred.
D. INFORMATION AND INSPECTION. Pledgor shall (i) promptly furnish Bank
any information with respect to the Collateral requested by Bank; (ii) allow
Bank or its representatives to inspect and copy, or furnish Bank or its
representatives with copies of, all records relating to the Collateral and the
Obligation; and (iii) promptly furnish Bank or its representatives with any
other information Bank may reasonably request.
E. ADDITIONAL DOCUMENTS. Pledgor shall sign and deliver any papers
furnished by Bank which are necessary or desirable in the judgment of Bank to
obtain, maintain and perfect the security interest hereunder and to enable
Bank to comply with any federal or state law in order to obtain or perfect
Bank's interest in the Collateral or to obtain proceeds of the Collateral.
F. NOTICE OF CHANGES. Pledgor shall notify Bank immediately of (i) any
material change in the Collateral, (ii) a change in Pledgor's residence or
location, (iii) a change in any matter warranted or represented by Pledgor in
this Agreement, or in any of the loan documents relating to the Obligation or
furnished to Bank pursuant to this Agreement, and (iv) the occurrence of an
Event of Default as defined herein.
G. POSSESSION OF COLLATERAL. Pledgor shall deliver a copy of this
Agreement (or other notice acceptable to Bank) to any Broker, financial
intermediary, or any other person in possession of any of the Collateral or on
whose books the interest of Pledgor in the Collateral appears, and such
delivery shall constitute notice to such person of Bank's security interest in
the Collateral and shall constitute Pledgor's instruction to such person to
note Bank's security interest on their books and records, or deliver to Bank
certificates or other evidence of the Collateral promptly upon Bank's request.
Pledgor shall deliver all investment securities and other instruments and
documents which are a part of the Collateral and in Pledgor's possession to
Bank immediately, or if hereafter acquired, immediately following acquisition,
in a form suitable for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures appropriately
guaranteed in form and substance suitable to Bank.
H. CHANGE OF NAME/STATUS. Pledgor shall not change its name, change its
corporate status, use any trade name or engage in any business not reasonably
related to its business as presently conducted.
I. POWER OF ATTORNEY. Pledgor appoints Bank and any officer thereof as
Pledgor's attorney-in-fact with full power in Pledgor's name and on Pledgor's
behalf upon and during the continuance of an Event of Default, to do every act
which Pledgor is obligated to do or may be required to do hereunder; however,
nothing in this paragraph shall be construed to obligate Bank to take any
action hereunder nor shall Bank be liable to Pledgor for failure to take any
action hereunder. This appointment shall be deemed a power coupled with an
interest and shall not be terminable as long as the Obligation is outstanding
and shall not terminate on the disability or incompetence of Pledgor. Without
limiting the generality of the foregoing, Bank shall have the right and power
to receive, indorse and collect all checks and other orders for the payment of
money made payable to Pledgor representing any dividend, interest payment or
other distribution payable in respect of the Collateral or any part thereof.
J. OTHER PARTIES AND OTHER COLLATERAL. No renewal or extensions of or any
other indulgence with respect to the Obligation or any part thereof, no
modification of the document(s) evidencing the Obligation, no release of any
security, no release of any person (including any maker, indorser, guarantor
or surety) liable on the Obligation, no delay in enforcement of payment, and
no delay or omission or lack of diligence or care in exercising any right or
power with respect to the Obligation or any security therefor or guaranty
thereof or under this Agreement shall in any manner impair or affect the
rights of Bank under any law, hereunder, or under any other agreement
pertaining to the Collateral. Bank need not file suit or assert a claim for
personal judgment against any person for any part of the Obligation or seek to
realize upon any other security for the Obligation, before foreclosing or
otherwise realizing upon the Collateral. Pledgor waives any right that can be
waived to the benefit of or to require or control application of any other
security or proceeds thereof, and agrees that Bank shall have no duty or
obligation to Pledgor to apply to the Obligation any such other security or
proceeds thereof.
K. WAIVERS BY PLEDGOR. Pledgor waives notice of the creation, advance,
increase, existence, extension or renewal of, and of any indulgence with
respect to, the Obligation; waives presentment, demand, notice of dishonor,
and protest; waives notice of the amount of the Obligation outstanding at any
time, notice of any change in financial condition of any person liable for the
Obligation or any part thereof, notice of any Event of Default, and all other
notices respecting the Obligation; and agrees that maturity of the Obligation
and any part thereof may be accelerated, extended or renewed one or more times
by Bank in its discretion, without notice to Pledgor. Pledgor waives any right
to require that any action be brought against any other person or to require
that resort be had to any other security or to any balance of any deposit
account. Pledgor further waives any right of subrogation or to enforce any
right of action against any other pledgor until the Obligation is paid in
full.
L. ADDITIONAL PROVISIONS. If one or more Riders to this Agreement are
executed by Pledgor, the covenants and provisions of each such Rider shall be
incorporated by reference into this Agreement.
6. MAINTENANCE OF COLLATERAL.
A. MAINTENANCE OF COLLATERAL. At all times during the term of the
Agreement, Pledgor agrees to maintain as security for the Obligation
Collateral of a type described on Schedule I with an Adjusted Collateral Value
(as determined herein) in excess of the unpaid principal balance of the
Obligation. The Adjusted Collateral Value shall be determined by multiplying
the Collateral Value (as defined in subparagraph B below) by the Margin Call
Percentage shown on Schedule I for the type of Collateral securing the
Obligation.
No advance requested by Pledgor shall be made to Pledgor if the sum of
(i) the outstanding principal balance of the Obligation plus (ii) the amount
of the advance requested, equals or exceeds the sum of the amounts determined
by multiplying the Collateral Value by the Original Advance Percentage for
each type of Collateral securing the Obligation.
B. VALUE OF COLLATERAL. The "Collateral Value" of Collateral shall be
determined at any given time as follows:
I. If stock, the Collateral Value shall be determined by multiplying (i)
the per share price of such stock at the most recent close of trading on a
trading exchange for such stock, times (ii) the number of shares of such stock
held by Bank as Collateral. In the event that stock held as Collateral is not
traded on an exchange, the Collateral Value of such stock shall be determined
by obtaining the quoted value of such stock from a reputable brokerage firm
selected by Bank. If no such quote is available, the value will be determined
by Bank in its sole discretion.
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II. If a mutual fund, the Collateral Value shall be determined by
multiplying (i) the most recent per share asset value of such mutual fund
obtained from the Wall Street Journal, times (ii) the number of shares of such
mutual fund held by Bank as Collateral. In the event that such net asset value
is not available in the Wall Street Journal, the Collateral Value shall be the
value quoted to Bank by a reputable brokerage firm selected by Bank.
III. If corporate bonds, the Collateral Value shall be determined from the
most recent closing price for such bonds obtained from the Wall Street
Journal. If such closing price is not available in the Wall Street Journal,
the Collateral Value shall be the value quoted to Bank by a reputable
brokerage firm selected by Bank.
IV. If government or agency obligations or bonds, the Collateral Value
shall be determined from the most recent closing bid price for such bonds
obtained from the Wall Street Journal. If such closing bid price is not
available in the Wall Street Journal, the Collateral Value shall be the value
quoted to Bank by a reputable brokerage firm selected by Bank.
V. If other than stock, mutual funds, corporate bonds, or government or
agency obligations or bonds, the Collateral Value shall be determined by the
Bank in its sole discretion.
C. BREACH OF COLLATERAL MAINTENANCE. Pledgor agrees that the failure to
maintain Collateral with an Adjusted Collateral Value as set forth above shall
constitute an Event of Default under this Agreement. In such event, the
Pledgor shall have two business days from the date Pledgor is notified by Bank
(in writing or orally) of such noncompliance, to either pledge additional
Collateral satisfactory to Bank, in its sole discretion, or reduce the unpaid
principal balance of the Obligations such that, in either case, the unpaid
principal balance of the Obligation is less than the sum of the amounts
determined by multiplying the Collateral Value by the Original Advance
Percentage shown on Schedule I for each type of Collateral securing the
Obligation. Any reduction in unpaid principal of the Obligation shall not
affect or reduce any future principal payments due except to the extent such
reductions are applied in accordance with the documents evidencing or securing
the Obligation. In the event Pledgor fails to comply with the terms hereof,
Bank may, without any further notice of any kind, exercise any of the
following rights and remedies, at Bank's option:
(a) The rights and remedies set out in Section 8.B. of this Agreement,
including without limitation the right to accelerate the Obligation and
liquidate the Collateral.
(b) Sell all or any part of the Collateral and apply the proceeds of such
sale to the Obligation to bring the Obligation back into compliance (
that is, to reduce the unpaid principal of the Obligation such that the
unpaid principal of the Obligation is less than the sum of the amounts
determined by multiplying the Collateral Value by the Original Advance
Percentage shown on Schedule 1 for each type of Collateral securing the
Obligation).
If an Event of Default exists hereunder and the Collateral is declining in
value or threatens to decline speedily in value, Bank shall have no obligation
to notify Pledgor of the failure to maintain Collateral with an Adjusted
Collateral Value as set forth in subparagraph A above or to provide Pledgor
with an opportunity to cure such noncompliance, and in such case Pledgor
agrees that Bank may immediately at Bank's sole option (i) declare amounts due
under the Obligation to be immediately due and payable, and/or (ii) sell all
or any part of the Collateral and apply the proceeds of such Collateral to the
Obligation.
D. SALE OR SUBSTITUTION OF COLLATERAL. If no Event of Default has
occurred under this Agreement or would result from such action, Pledgor may
(i) sell, trade, or withdraw any part of the Collateral; or (ii) substitute
new Collateral for existing Collateral, provided that, in either event, the
new Collateral shall be acceptable to Bank in its sole discretion and the
unpaid principal balance of the Obligation shall be less than the sum of the
amounts determined by multiplying the Collateral Value by the Original Advance
Percentage for each type of Collateral securing the Obligation.
7. RIGHTS AND POWERS OF BANK.
A. GENERAL. Bank, before or after default, without liability to Pledgor
may: take control of proceeds, including stock received as dividends or by
reason of stock splits; release the Collateral in its possession to any
Pledgor, temporarily or otherwise; require additional Collateral; reject as
unsatisfactory any property hereafter offered by Pledgor as Collateral; take
control of funds generated by the Collateral, such as cash dividends, interest
and proceeds, and use same to reduce any part of the Obligation and exercise
all other rights which an owner of such Collateral may exercise, except the
right to vote or dispose of the Collateral before an Event of Default; and at
any time transfer any of the Collateral or evidence thereof into its own name
or that of its nominee. Bank shall not be liable for failure to collect any
account or instruments, or for any act or omission on the part of Bank, its
officers, agents or employees, except for its or their own willful misconduct
or gross negligence. The foregoing rights and powers of Bank will be in
addition to, and not a limitation upon, any rights and powers of Bank given by
law, elsewhere in this Agreement, or otherwise.
B. CONVERTIBLE COLLATERAL. Bank may present for conversion any Collateral
which is convertible into any other instrument or investment security or a
combination thereof with cash, but Bank shall not have any duty to present for
conversion any Collateral unless it shall have received from Pledgor detailed
written instructions to that effect at a time reasonably far in advance of the
final conversion date to make such conversion possible.
8. DEFAULT.
A. EVENT OF DEFAULT. An event of default ("Event of Default") shall occur
(a) if Pledgor or any other obligor on all or part of the Obligation shall
fail to timely and properly pay or observe, keep or perform any term,
covenant, agreement or condition in this Agreement or in any other agreement
between Pledgor and Bank or between Bank and any other obligor on the
Obligation, including but not limited to any other note or instrument, loan
agreement, security agreement, deed of trust, mortgage, promissory note,
assignment or other agreement or instrument concerning the Obligation; or (b)
if Pledgor or such other obligor shall fail to timely and properly pay or
observe, keep or perform any term, covenant, agreement or condition in any
agreement between such party and any affiliate or subsidiary of NationsBank
Corporation.
B. RIGHTS AND REMEDIES. If any Event of Default shall occur, then, in
each and every such case, Bank may, without (a) presentment, demand, or
protest, (b) notice of default, dishonor, demand, non-payment, or protest, (c)
notice of intent to accelerate all or any part of the Obligation, (d) notice
of acceleration of all or any part of the Obligation, or (e) notice of any
other kind, all of which Pledgor hereby expressly waives (except for any
notice required under this Agreement, any other loan document or which may not
be waived under applicable law), at any time thereafter exercise and/or
enforce any of the following rights and remedies, at Bank's option:
I. ACCELERATION. The Obligation shall, at Bank's option, become
immediately due and payable, and the obligation, if any, of Bank to permit
further borrowings under the Obligation shall at Bank's option immediately
cease and terminate.
II. LIQUIDATION OF COLLATERAL. Sell, or instruct any Agent or Broker
to sell, all or any part of the Collateral in a public or private sale, direct
any Agent or Broker to liquidate all or any part of any Account and deliver
all proceeds thereof to Bank, and apply all proceeds to the payment of any or
all of the Obligation in such order and manner as Bank shall, in its
discretion, choose.
III. UNIFORM COMMERCIAL CODE. All of the rights, powers and remedies
of a secured creditor under the Uniform Commercial Code ("UCC") as adopted in
the jurisdiction to which Bank is subject under this Agreement.
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IV. RIGHT OF SET OFF. Without notice or demand to Pledgor, set off
and apply against any and all of the Obligation any and all deposits (general
or special, time or demand, provisional or final) and any other indebtedness,
at any time held or owing by Bank or by any of Bank's affiliates or
correspondents to or for the credit of the account of Pledgor or any guarantor
or indorser of Pledgor's Obligation.
Pledgor specifically understands and agrees that any sale by Bank of all or
part of the Collateral pursuant to the terms of this Agreement may be effected
by Bank at times and in manners which could result in the proceeds of such
sale as being significantly and materially less than might have been received
if such sale had occurred at different times or in different manners, and
Pledgor hereby releases Bank and its officers and representatives from and
against any and all obligations and liabilities arising out of or related to
the timing or manner of any such sale.
If, in the opinion of Bank, there is any question that a public sale or
distribution of any Collateral will violate any state or federal securities
law, Bank may offer and sell such Collateral in a transaction exempt from
registration under federal securities law, and any such sale made in good
faith by Bank shall be deemed "commercially reasonable."
9. GENERAL.
A. PARTIES BOUND. Bank's rights hereunder shall inure to the benefit of
its successors and assigns, and in the event of any assignment or transfer of
any of the Obligation or the Collateral, Bank thereafter shall be fully
discharged from any responsibility with respect to the Collateral so assigned
or transferred, but Bank shall retain all rights and powers hereby given with
respect to any of the Obligation or the Collateral not so assigned or
transferred. All representations, warranties and agreements of Pledgor, if
more than one, are joint and several and all shall be binding upon the
personal representatives, heirs, successors and assigns of Pledgor.
B. WAIVER. No delay of Bank in exercising any power or right shall
operate as a waiver thereof; nor shall any single or partial exercise of any
power or right preclude other or further exercise thereof or the exercise of
any other power or right. No waiver by Bank of any right hereunder or of any
default by Pledgor shall be binding upon Bank unless in writing, and no
failure by Bank to exercise any power or right hereunder or waiver of any
default by Pledgor shall operate as a waiver of any other or further exercise
of such right or power or of any further default. Each right, power and remedy
of Bank as provided for herein or in any of the loan documents related to the
Obligation, or which shall now or hereafter exist at law or in equity or by
statute or otherwise, shall be cumulative and concurrent and shall be in
addition to every other such right, power or remedy. The exercise or beginning
of the exercise by Bank of any one or more of such rights, powers or remedies
shall not preclude the simultaneous or later exercise by Bank of any or all
other such rights, powers or remedies.
C. AGREEMENT CONTINUING. This Agreement shall constitute a continuing
agreement. If the Obligation consists of All Debt, this Agreement shall apply
to all future as well as existing transactions, whether or not of the
character contemplated at the date of this Agreement, and if all transactions
between Bank and Pledgor shall be closed at any time, shall be equally
applicable to any new transactions thereafter. Provisions of this Agreement,
unless by their terms exclusive, shall be in addition to other agreements
between the parties. Time is of the essence of this Agreement.
D. DEFINITIONS. Unless the context indicates otherwise, definitions in
the UCC apply to words and phrases in this Agreement; if UCC definitions
conflict, Article 8 and/or 9 definitions apply.
E. NOTICE. Notice shall be deemed reasonable if mailed postage prepaid at
least 5 days before the related action (or if the UCC elsewhere specifies a
longer period, such longer period) to the address of Pledgor given above. Each
notice, request and demand shall be deemed given or made, if sent by mail,
upon the earlier of the date of receipt or five (5) days after deposit in the
U.S. Mail, first class postage prepaid, or if sent by any other means, upon
delivery.
F. MODIFICATIONS. No provision hereof shall be modified or limited except
by a written agreement expressly referring hereto and to the provisions so
modified or limited and signed by Pledgor and Bank. The provisions of this
Agreement shall not be modified or limited by course of conduct or usage of
trade.
G. PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Agreement shall not affect the enforceability or validity of
any other provision herein, and the invalidity or unenforceability of any
provision of any loan document related to the Obligation to any person or
circumstance shall not affect the enforceability or validity of such provision
as it may apply to other persons or circumstances.
H. APPLICABLE LAW AND VENUE. This Agreement has been delivered in the
State of North Carolina and shall be construed in accordance with the laws of
that State. It is performable by Pledgor in the county or city of Bank's
address set out above and Pledgor expressly waives any objection as to venue
in any such location. Wherever possible each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Agreement.
I. FINANCING STATEMENT. To the extent permitted by applicable law, a
carbon, photographic or other reproduction of this Agreement or any financing
statement covering the Collateral shall be sufficient as a financing
statement.
J. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY
BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL
ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY
COURT HAVING JURISDICTION OVER SUCH ACTION.
I. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY
BORROWER'S DOMICILE, OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL, IN
THE COUNTY WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED AT THE TIME OF THE
EXECUTION OF THIS INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED BY
J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY
PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90
DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A
SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR
UP TO AN ADDITIONAL 60 DAYS.
-4-
<PAGE>
II. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT
OR DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY
12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT
THE RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT
LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES
SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE
APPOINTMENT OF A RECEIVER. BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE
UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE,
DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO
THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP
REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF
ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS
OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
K. CONTROLLING DOCUMENT. To the extent that this Agreement conflicts with
or is in any way incompatible with any other loan document concerning the
Obligation, any promissory note shall control over any other document, and if
such promissory note does not address an issue, then each other loan document
shall control to the extent that it deals most specifically with an issue.
L. EXECUTION UNDER SEAL. This Agreement is being executed under seal by
Pledgor(s).
M. NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND ANY OTHER
DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed under seal by their duly authorized representatives as of the date
first above written.
BANK/SECURED PARTY:
NATIONSBANK, N.A.
By: /s/ Rosemary Vrablic
----------------------------------------
Name: Rosemary Vrablic
Title: Senior Vice President
CORPORATE OR PARTNERSHIP PLEDGOR:
Kanders Florida Holdings, Inc.
By: /s/Warren B. Kanders (Seal)
--------------------------
Name: Warren B. Kanders
Title: President
-----------------------------------
Attest (If Applicable)
[Corporate Seal]
-5-
<PAGE>
SCHEDULE I
TO
PLEDGE AGREEMENT
<TABLE>
<CAPTION>
ORIGINAL ADVANCE MARGIN CALL
COLLATERAL TYPE PERCENTAGE PERCENTAGE
- --------------- ---------- ----------
<S> <C> <C>
STOCKS/BONDS 70% 75%
Listed Stocks (NYSE or ASE)1
(non-purpose loan)
OTC Margin Stocks 70% 75%
(non-purpose loan)
OTC Non-Margin Stocks1 50% 55%
U.S. Government Obligations 90% 95%
U.S. Agency Bonds 80% 85%
State/Municipal Bonds 80% 85%
(A or higher)
Corporate Bonds2 80% 85%
(BAA or higher)
Cash Surrender Value of Life Insurance 95% 95%
NationsBank Deposit Account 100% 100%
Other Federally Insured Deposit Accounts 90% 90%
Mutual Funds (quoted daily in WSJ or Barron's)
Money Market 95% 95%
U.S. Government Obligations 90% 95%
Corporate/Municipal Bonds 80% 85%
Equities 70% 75%
NationsBanc Investments, Inc. Account #PSA 041319 40% 50%
</TABLE>
1Loans for the purpose of purchasing or carrying margin stocks are limited by
Regulation U to a 50% Original Advance Percentage.
2Does not apply to convertible bonds which are convertible into stocks which
are limited to the applicable percentages for the stock to which they may
convert.
<PAGE>
NATIONSBANK, N. A. Customer# 955491
Date: August 15, 1997
PLEDGE AGREEMENT
<TABLE>
<CAPTION>
=========================================================================================
<S> <C>
BANK/SECURED PARTY: PLEDGOR(S)/DEBTOR(S):
NationsBank, N.A.
Banking Center:
Kanders Florida Holdings, Inc.
Private Client Group 2100 S. Ocean Boulevard, Suite 302N
767 5th Avenue Palm Beach, Florida 33480
New York, New York 10153
County: County:
(Street address including county)
(Name and street address including county)
=========================================================================================
Pledgor/Debtor is: Corporation
Address is Pledgor's/Debtor's:
=========================================================================================
</TABLE>
1. SECURITY INTEREST. For good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor/Debtor (hereinafter
referred to as "Pledgor") pledges, assigns and grants to Bank a security
interest and lien in the Collateral (hereinafter defined) to secure the
payment and the performance of the Obligation (hereinafter defined).
2. COLLATERAL. The security interest is granted in the following collateral
(the "Collateral"):
A. DESCRIPTION OF COLLATERAL.
SPECIFIC INVESTMENT PROPERTY/SECURITIES: The following investment
property and/or securities, together with all investment property and/or
securities hereafter delivered to Bank in substitution therefor or in addition
thereto: The below listed shares of Armor Holdings, Inc., formerly known as
American Body Armor & Equipment, common stock totalling 3,196,037, 538,174
shares, certificate number AH 0081 ,CUSIP # 042260 10 9 1,042,043 shares,
certificate number AH 0082, CUSIP # 042260 10 9 1,615,820 shares, certificate
number NU 5516, CUSIP number 024635 20 3 .
It is contemplated by the parties that Pledgor may provide additional
collateral from time to time hereunder as additional security for the
Obligation, and may from time to time with the prior written consent of Bank
sell or otherwise dispose of any Collateral provided that Pledgor provides
Bank with substitute collateral. At the time of each addition or substitution
of Collateral, the securities added or substituted shall be identified on a
Pledge Certificate, substantially in the form of Schedule II attached hereto
(the "Pledge Certificate"), and delivered to Bank. Bank has no obligation to
make any advances requested in connection therewith unless (i) such additional
and/or substituted Collateral is satisfactory to Bank and (ii) the perfected
security interest granted to Bank therein is completed to the satisfaction of
Bank. All such additional and/or substituted Collateral shall be Collateral
for purposes of this Agreement, and shall secure the Obligation in the same
manner as the Collateral for which it is added to and/or substituted.
B. PROCEEDS. All additions, substitutes and replacements for and
proceeds of the above Collateral (including all income and benefits resulting
from any of the above, such as dividends payable or distributable in cash,
property or stock; interest, premium and principal payments; redemption
proceeds and subscription rights; and shares or other proceeds of conversions
or splits of any securities in the Collateral). Any investment property and/or
securities received by Pledgor, which shall comprise such additions,
substitutes and replacements for, or proceeds of, the Collateral, shall be
held in trust for Bank and shall be delivered immediately to Bank. Any cash
proceeds shall be held in trust for Bank and upon request shall be delivered
immediately to Bank.
3. OBLIGATION.
A. DESCRIPTION OF OBLIGATION. The following obligations ("Obligation")
are secured by this Agreement:
I. PROMISSORY NOTE: All debt arising under promissory note dated
August 15, 1997 in the principal face amount of $16,000,000.00 executed by
Kanders Florida Holdings, Inc. payable to the order of NationsBank, N.A., and
any and all renewals, extensions and rearrangements thereof;
II. All costs and expenses incurred by Bank, including reasonable
attorney's fees, to obtain, preserve, perfect , enforce and defend this
Agreement and maintain, preserve, collect and realize upon the Collateral,
together with interest thereon at the highest rate allowed by law, or if none,
25% per annum;
III. All amounts which may be owed to Bank pursuant to all other loan
documents executed in connection with the indebtedness described in subpart i.
above.
In the event any amount paid to Bank on any Obligation is subsequently
recovered from Bank in or as a result of any bankruptcy, insolvency or
fraudulent conveyance proceeding involving an obligor of the Obligation other
than Pledgor, Pledgor shall be liable to Bank for the amounts so recovered up
to the fair market value of the Collateral whether or not the Collateral has
been released or the security interest terminated. In the event the Collateral
has been released or the security interest terminated, the fair market value
of the Collateral shall be determined, at Bank's option, as of the date the
Collateral was released, the security interest terminated, or said amounts
were recovered.
B. USE OF PROCEEDS. The proceeds of any indebtedness or obligation
secured by the Collateral WILL NOT BE used directly or indirectly to purchase
or carry any "margin stock" as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System, or extend credit to or
invest in other parties for the purpose of purchasing or carrying any such
"margin stock," or to reduce or retire any indebtedness incurred for such
purpose or otherwise in a manner which would violate Regulations G, T or U.
4. PLEDGOR'S WARRANTIES. Pledgor hereby represents and warrants to Bank as
follows:
A. FINANCING STATEMENTS. Except as may be noted by schedule attached
hereto and incorporated herein by reference, no financing statement covering
the Collateral is or will be on file in any public office, except the
financing statements relating to this security interest, and no security
interest, other than the one herein created, has attached or been perfected in
the Collateral or any part thereof.
B. OWNERSHIP. Pledgor owns, or will use the proceeds of any loans by Bank
to become the owner of, the Collateral free from any setoff, claim,
restriction, lien, security interest or encumbrance except liens for taxes not
yet due and payable and the security interest hereunder.
-1-
<PAGE>
C. POWER AND AUTHORITY. Pledgor has full power and authority to make this
Agreement, and all necessary consents and approvals of any persons, entities,
governmental or regulatory authorities and securities exchanges have been
obtained to effectuate the validity of this Agreement.
5. PLEDGOR'S COVENANTS. Until full payment and performance of all of the
Obligation and termination or expiration of any obligation or commitment of
Bank to make advances or loans to Pledgor, unless Bank otherwise consents in
writing:
A. OBLIGATION AND THIS AGREEMENT. Pledgor shall perform all of its
agreements herein and in any other agreements between it and Bank.
B. OWNERSHIP OF COLLATERAL. Pledgor shall defend the Collateral against
all claims and demands of all persons at any time claiming any interest
therein adverse to Bank. Pledgor shall keep the Collateral free from all liens
and security interests except those for taxes not yet due and payable and the
security interest hereby created.
C. BANK'S COSTS. Pledgor shall pay all costs necessary to obtain,
preserve, perfect, defend and enforce the security interest created by this
Agreement, collect the Obligation, and preserve, defend, enforce and collect
the Collateral, including but not limited to taxes, assessments, reasonable
attorney's fees, legal expenses and expenses of sales. Whether the Collateral
is or is not in Bank's possession, and without any obligation to do so and
without waiving Pledgor's default for failure to make any such payment, Bank
at its option may pay any such costs and expenses and discharge encumbrances
on the Collateral, and such payments shall be a part of the Obligation and
bear interest at the rate set out in the Obligation. Pledgor agrees to
reimburse Bank on demand for any costs so incurred.
D. INFORMATION AND INSPECTION. Pledgor shall (i) promptly furnish Bank
any information with respect to the Collateral requested by Bank; (ii) allow
Bank or its representatives to inspect and copy, or furnish Bank or its
representatives with copies of, all records relating to the Collateral and the
Obligation; and (iii) promptly furnish Bank or its representatives with any
other information Bank may reasonably request.
E. ADDITIONAL DOCUMENTS. Pledgor shall sign and deliver any papers
furnished by Bank which are necessary or desirable in the judgment of Bank to
obtain, maintain and perfect the security interest hereunder and to enable
Bank to comply with any federal or state law in order to obtain or perfect
Bank's interest in the Collateral or to obtain proceeds of the Collateral.
F. NOTICE OF CHANGES. Pledgor shall notify Bank immediately of (i) any
material change in the Collateral, (ii) a change in Pledgor's residence or
location, (iii) a change in any matter warranted or represented by Pledgor in
this Agreement, or in any of the loan documents relating to the Obligation or
furnished to Bank pursuant to this Agreement, and (iv) the occurrence of an
Event of Default as defined herein.
G. POSSESSION OF COLLATERAL. Pledgor shall deliver a copy of this
Agreement (or other notice acceptable to Bank) to any Broker, financial
intermediary, or any other person in possession of any of the Collateral or on
whose books the interest of Pledgor in the Collateral appears, and such
delivery shall constitute notice to such person of Bank's security interest in
the Collateral and shall constitute Pledgor's instruction to such person to
note Bank's security interest on their books and records, or deliver to Bank
certificates or other evidence of the Collateral promptly upon Bank's request.
Pledgor shall deliver all investment securities and other instruments and
documents which are a part of the Collateral and in Pledgor's possession to
Bank immediately, or if hereafter acquired, immediately following acquisition,
in a form suitable for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures appropriately
guaranteed in form and substance suitable to Bank.
H. CHANGE OF NAME/STATUS. Pledgor shall not change its name, change its
corporate status, use any trade name or engage in any business not reasonably
related to its business as presently conducted.
I. POWER OF ATTORNEY. Pledgor appoints Bank and any officer thereof as
Pledgor's attorney-in-fact with full power in Pledgor's name and on Pledgor's
behalf upon and during the continuance of an Event of Default, to do every act
which Pledgor is obligated to do or may be required to do hereunder; however,
nothing in this paragraph shall be construed to obligate Bank to take any
action hereunder nor shall Bank be liable to Pledgor for failure to take any
action hereunder. This appointment shall be deemed a power coupled with an
interest and shall not be terminable as long as the Obligation is outstanding
and shall not terminate on the disability or incompetence of Pledgor. Without
limiting the generality of the foregoing, Bank shall have the right and power
to receive, indorse and collect all checks and other orders for the payment of
money made payable to Pledgor representing any dividend, interest payment or
other distribution payable in respect of the Collateral or any part thereof.
J. OTHER PARTIES AND OTHER COLLATERAL. No renewal or extensions of or any
other indulgence with respect to the Obligation or any part thereof, no
modification of the document(s) evidencing the Obligation, no release of any
security, no release of any person (including any maker, indorser, guarantor
or surety) liable on the Obligation, no delay in enforcement of payment, and
no delay or omission or lack of diligence or care in exercising any right or
power with respect to the Obligation or any security therefor or guaranty
thereof or under this Agreement shall in any manner impair or affect the
rights of Bank under any law, hereunder, or under any other agreement
pertaining to the Collateral. Bank need not file suit or assert a claim for
personal judgment against any person for any part of the Obligation or seek to
realize upon any other security for the Obligation, before foreclosing or
otherwise realizing upon the Collateral. Pledgor waives any right that can be
waived to the benefit of or to require or control application of any other
security or proceeds thereof, and agrees that Bank shall have no duty or
obligation to Pledgor to apply to the Obligation any such other security or
proceeds thereof.
K. WAIVERS BY PLEDGOR. Pledgor waives notice of the creation, advance,
increase, existence, extension or renewal of, and of any indulgence with
respect to, the Obligation; waives presentment, demand, notice of dishonor,
and protest; waives notice of the amount of the Obligation outstanding at any
time, notice of any change in financial condition of any person liable for the
Obligation or any part thereof, notice of any Event of Default, and all other
notices respecting the Obligation; and agrees that maturity of the Obligation
and any part thereof may be accelerated, extended or renewed one or more times
by Bank in its discretion, without notice to Pledgor. Pledgor waives any right
to require that any action be brought against any other person or to require
that resort be had to any other security or to any balance of any deposit
account. Pledgor further waives any right of subrogation or to enforce any
right of action against any other pledgor until the Obligation is paid in
full.
L. ADDITIONAL PROVISIONS. If one or more Riders to this Agreement are
executed by Pledgor, the covenants and provisions of each such Rider shall be
incorporated by reference into this Agreement.
6. MAINTENANCE OF COLLATERAL.
A. MAINTENANCE OF COLLATERAL. At all times during the term of the
Agreement, Pledgor agrees to maintain as security for the Obligation
Collateral of a type described on Schedule I with an Adjusted Collateral Value
(as determined herein) in excess of the unpaid principal balance of the
Obligation. The Adjusted Collateral Value shall be determined by multiplying
the Collateral Value (as defined in subparagraph B below) by the Margin Call
Percentage shown on Schedule I for the type of Collateral securing the
Obligation.
-2-
<PAGE>
No advance requested by Pledgor shall be made to Pledgor if the sum of
(i) the outstanding principal balance of the Obligation plus (ii) the amount
of the advance requested, equals or exceeds the sum of the amounts determined
by multiplying the Collateral Value by the Original Advance Percentage for
each type of Collateral securing the Obligation.
B. VALUE OF COLLATERAL. The "Collateral Value" of Collateral shall be
determined at any given time as follows:
I. If stock, the Collateral Value shall be determined by multiplying (i)
the per share price of such stock at the most recent close of trading on a
trading exchange for such stock, times (ii) the number of shares of such stock
held by Bank as Collateral. In the event that stock held as Collateral is not
traded on an exchange, the Collateral Value of such stock shall be determined
by obtaining the quoted value of such stock from a reputable brokerage firm
selected by Bank. If no such quote is available, the value will be determined
by Bank in its sole discretion.
II. If a mutual fund, the Collateral Value shall be determined by
multiplying (i) the most recent per share asset value of such mutual fund
obtained from the Wall Street Journal, times (ii) the number of shares of such
mutual fund held by Bank as Collateral. In the event that such net asset value
is not available in the Wall Street Journal, the Collateral Value shall be the
value quoted to Bank by a reputable brokerage firm selected by Bank.
III. If corporate bonds, the Collateral Value shall be determined from the
most recent closing price for such bonds obtained from the Wall Street
Journal. If such closing price is not available in the Wall Street Journal,
the Collateral Value shall be the value quoted to Bank by a reputable
brokerage firm selected by Bank.
IV. If government or agency obligations or bonds, the Collateral Value
shall be determined from the most recent closing bid price for such bonds
obtained from the Wall Street Journal. If such closing bid price is not
available in the Wall Street Journal, the Collateral Value shall be the value
quoted to Bank by a reputable brokerage firm selected by Bank.
V. If other than stock, mutual funds, corporate bonds, or government or
agency obligations or bonds, the Collateral Value shall be determined by the
Bank in its sole discretion.
C. BREACH OF COLLATERAL MAINTENANCE. Pledgor agrees that the failure to
maintain Collateral with an Adjusted Collateral Value as set forth above shall
constitute an Event of Default under this Agreement. In such event, the
Pledgor shall have two business days from the date Pledgor is notified by Bank
(in writing or orally) of such noncompliance, to either pledge additional
Collateral satisfactory to Bank, in its sole discretion, or reduce the unpaid
principal balance of the Obligations such that, in either case, the unpaid
principal balance of the Obligation is less than the sum of the amounts
determined by multiplying the Collateral Value by the Original Advance
Percentage shown on Schedule I for each type of Collateral securing the
Obligation. Any reduction in unpaid principal of the Obligation shall not
affect or reduce any future principal payments due except to the extent such
reductions are applied in accordance with the documents evidencing or securing
the Obligation. In the event Pledgor fails to comply with the terms hereof,
Bank may, without any further notice of any kind, exercise any of the
following rights and remedies, at Bank's option:
(a) The rights and remedies set out in Section 8.B. of this Agreement,
including without limitation the right to accelerate the Obligation and
liquidate the Collateral.
(b) Sell all or any part of the Collateral and apply the proceeds of such
sale to the Obligation to bring the Obligation back into compliance (
that is, to reduce the unpaid principal of the Obligation such that the
unpaid principal of the Obligation is less than the sum of the amounts
determined by multiplying the Collateral Value by the Original Advance
Percentage shown on Schedule 1 for each type of Collateral securing the
Obligation).
If an Event of Default exists hereunder and the Collateral is declining in
value or threatens to decline speedily in value, Bank shall have no obligation
to notify Pledgor of the failure to maintain Collateral with an Adjusted
Collateral Value as set forth in subparagraph A above or to provide Pledgor
with an opportunity to cure such noncompliance, and in such case Pledgor
agrees that Bank may immediately at Bank's sole option (i) declare amounts due
under the Obligation to be immediately due and payable, and/or (ii) sell all
or any part of the Collateral and apply the proceeds of such Collateral to the
Obligation.
D. SALE OR SUBSTITUTION OF COLLATERAL. If no Event of Default has
occurred under this Agreement or would result from such action, Pledgor may
(i) sell, trade, or withdraw any part of the Collateral; or (ii) substitute
new Collateral for existing Collateral, provided that, in either event, the
new Collateral shall be acceptable to Bank in its sole discretion and the
unpaid principal balance of the Obligation shall be less than the sum of the
amounts determined by multiplying the Collateral Value by the Original Advance
Percentage for each type of Collateral securing the Obligation.
7. RIGHTS AND POWERS OF BANK.
A. GENERAL. Bank, before or after default, without liability to Pledgor
may: take control of proceeds, including stock received as dividends or by
reason of stock splits; release the Collateral in its possession to any
Pledgor, temporarily or otherwise; require additional Collateral; reject as
unsatisfactory any property hereafter offered by Pledgor as Collateral; take
control of funds generated by the Collateral, such as cash dividends, interest
and proceeds, and use same to reduce any part of the Obligation and exercise
all other rights which an owner of such Collateral may exercise, except the
right to vote or dispose of the Collateral before an Event of Default; and at
any time transfer any of the Collateral or evidence thereof into its own name
or that of its nominee. Bank shall not be liable for failure to collect any
account or instruments, or for any act or omission on the part of Bank, its
officers, agents or employees, except for its or their own willful misconduct
or gross negligence. The foregoing rights and powers of Bank will be in
addition to, and not a limitation upon, any rights and powers of Bank given by
law, elsewhere in this Agreement, or otherwise.
B. CONVERTIBLE COLLATERAL. Bank may present for conversion any Collateral
which is convertible into any other instrument or investment security or a
combination thereof with cash, but Bank shall not have any duty to present for
conversion any Collateral unless it shall have received from Pledgor detailed
written instructions to that effect at a time reasonably far in advance of the
final conversion date to make such conversion possible.
8. DEFAULT.
A. EVENT OF DEFAULT. An event of default ("Event of Default") shall occur
(a) if Pledgor or any other obligor on all or part of the Obligation shall
fail to timely and properly pay or observe, keep or perform any term,
covenant, agreement or condition in this Agreement or in any other agreement
between Pledgor and Bank or between Bank and any other obligor on the
Obligation, including but not limited to any other note or instrument, loan
agreement, security agreement, deed of trust, mortgage, promissory note,
assignment or other agreement or instrument concerning the Obligation; or (b)
if Pledgor or such other obligor shall fail to timely and properly pay or
observe, keep or perform any term, covenant, agreement or condition in any
agreement between such party and any affiliate or subsidiary of NationsBank
Corporation.
-3-
<PAGE>
B. RIGHTS AND REMEDIES. If any Event of Default shall occur, then, in
each and every such case, Bank may, without (a) presentment, demand, or
protest, (b) notice of default, dishonor, demand, non-payment, or protest, (c)
notice of intent to accelerate all or any part of the Obligation, (d) notice
of acceleration of all or any part of the Obligation, or (e) notice of any
other kind, all of which Pledgor hereby expressly waives (except for any
notice required under this Agreement, any other loan document or which may not
be waived under applicable law), at any time thereafter exercise and/or
enforce any of the following rights and remedies, at Bank's option:
I. ACCELERATION. The Obligation shall, at Bank's option, become
immediately due and payable, and the obligation, if any, of Bank to permit
further borrowings under the Obligation shall at Bank's option immediately
cease and terminate.
II. LIQUIDATION OF COLLATERAL. Sell, or instruct any Agent or Broker
to sell, all or any part of the Collateral in a public or private sale, direct
any Agent or Broker to liquidate all or any part of any Account and deliver
all proceeds thereof to Bank, and apply all proceeds to the payment of any or
all of the Obligation in such order and manner as Bank shall, in its
discretion, choose.
III. UNIFORM COMMERCIAL CODE. All of the rights, powers and remedies
of a secured creditor under the Uniform Commercial Code ("UCC") as adopted in
the jurisdiction to which Bank is subject under this Agreement.
IV. RIGHT OF SET OFF. Without notice or demand to Pledgor, set off
and apply against any and all of the Obligation any and all deposits (general
or special, time or demand, provisional or final) and any other indebtedness,
at any time held or owing by Bank or by any of Bank's affiliates or
correspondents to or for the credit of the account of Pledgor or any guarantor
or indorser of Pledgor's Obligation.
Pledgor specifically understands and agrees that any sale by Bank of all or
part of the Collateral pursuant to the terms of this Agreement may be effected
by Bank at times and in manners which could result in the proceeds of such
sale as being significantly and materially less than might have been received
if such sale had occurred at different times or in different manners, and
Pledgor hereby releases Bank and its officers and representatives from and
against any and all obligations and liabilities arising out of or related to
the timing or manner of any such sale.
If, in the opinion of Bank, there is any question that a public sale or
distribution of any Collateral will violate any state or federal securities
law, Bank may offer and sell such Collateral in a transaction exempt from
registration under federal securities law, and any such sale made in good
faith by Bank shall be deemed "commercially reasonable."
9. GENERAL.
A. PARTIES BOUND. Bank's rights hereunder shall inure to the benefit of
its successors and assigns, and in the event of any assignment or transfer of
any of the Obligation or the Collateral, Bank thereafter shall be fully
discharged from any responsibility with respect to the Collateral so assigned
or transferred, but Bank shall retain all rights and powers hereby given with
respect to any of the Obligation or the Collateral not so assigned or
transferred. All representations, warranties and agreements of Pledgor, if
more than one, are joint and several and all shall be binding upon the
personal representatives, heirs, successors and assigns of Pledgor.
B. WAIVER. No delay of Bank in exercising any power or right shall
operate as a waiver thereof; nor shall any single or partial exercise of any
power or right preclude other or further exercise thereof or the exercise of
any other power or right. No waiver by Bank of any right hereunder or of any
default by Pledgor shall be binding upon Bank unless in writing, and no
failure by Bank to exercise any power or right hereunder or waiver of any
default by Pledgor shall operate as a waiver of any other or further exercise
of such right or power or of any further default. Each right, power and remedy
of Bank as provided for herein or in any of the loan documents related to the
Obligation, or which shall now or hereafter exist at law or in equity or by
statute or otherwise, shall be cumulative and concurrent and shall be in
addition to every other such right, power or remedy. The exercise or beginning
of the exercise by Bank of any one or more of such rights, powers or remedies
shall not preclude the simultaneous or later exercise by Bank of any or all
other such rights, powers or remedies.
C. AGREEMENT CONTINUING. This Agreement shall constitute a continuing
agreement. If the Obligation consists of All Debt, this Agreement shall apply
to all future as well as existing transactions, whether or not of the
character contemplated at the date of this Agreement, and if all transactions
between Bank and Pledgor shall be closed at any time, shall be equally
applicable to any new transactions thereafter. Provisions of this Agreement,
unless by their terms exclusive, shall be in addition to other agreements
between the parties. Time is of the essence of this Agreement.
D. DEFINITIONS. Unless the context indicates otherwise, definitions in
the UCC apply to words and phrases in this Agreement; if UCC definitions
conflict, Article 8 and/or 9 definitions apply.
E. NOTICE. Notice shall be deemed reasonable if mailed postage prepaid at
least 5 days before the related action (or if the UCC elsewhere specifies a
longer period, such longer period) to the address of Pledgor given above. Each
notice, request and demand shall be deemed given or made, if sent by mail,
upon the earlier of the date of receipt or five (5) days after deposit in the
U.S. Mail, first class postage prepaid, or if sent by any other means, upon
delivery.
F. MODIFICATIONS. No provision hereof shall be modified or limited except
by a written agreement expressly referring hereto and to the provisions so
modified or limited and signed by Pledgor and Bank. The provisions of this
Agreement shall not be modified or limited by course of conduct or usage of
trade.
G. PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Agreement shall not affect the enforceability or validity of
any other provision herein, and the invalidity or unenforceability of any
provision of any loan document related to the Obligation to any person or
circumstance shall not affect the enforceability or validity of such provision
as it may apply to other persons or circumstances.
H. APPLICABLE LAW AND VENUE. This Agreement has been delivered in the
State of North Carolina and shall be construed in accordance with the laws of
that State. It is performable by Pledgor in the county or city of Bank's
address set out above and Pledgor expressly waives any objection as to venue
in any such location. Wherever possible each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Agreement.
I. FINANCING STATEMENT. To the extent permitted by applicable law, a
carbon, photographic or other reproduction of this Agreement or any financing
statement covering the Collateral shall be sufficient as a financing
statement.
J. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY
-4-
<PAGE>
SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY
PARTY TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING
A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER
SUCH ACTION.
I. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY
BORROWER'S DOMICILE, OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL, IN
THE COUNTY WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED AT THE TIME OF THE
EXECUTION OF THIS INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED BY
J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY
PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90
DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A
SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR
UP TO AN ADDITIONAL 60 DAYS.
II. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT
OR DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY
12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT
THE RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT
LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES
SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE
APPOINTMENT OF A RECEIVER. BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE
UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE,
DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO
THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP
REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF
ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS
OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
K. CONTROLLING DOCUMENT. To the extent that this Agreement conflicts with
or is in any way incompatible with any other loan document concerning the
Obligation, any promissory note shall control over any other document, and if
such promissory note does not address an issue, then each other loan document
shall control to the extent that it deals most specifically with an issue.
L. EXECUTION UNDER SEAL. This Agreement is being executed under seal by
Pledgor(s).
M. NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND ANY OTHER
DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed under seal by their duly authorized representatives as of the date
first above written.
BANK/SECURED PARTY:
NATIONSBANK, N.A.
By:/s/ Rosemary Vrablic
-------------------------------
Name: Rosemary Vrablic
Title: Senior Vice President CORPORATE OR PARTNERSHIP PLEDGOR:
Kanders Florida Holdings, Inc.
By:/s/ Waren B. Kanders (Seal)
--------------------------
Name: Warren B. Kanders
Title: President
-----------------------------------
Attest (If Applicable)
[Corporate Seal]
-5-
<PAGE>
SCHEDULE I
TO
PLEDGE AGREEMENT
<TABLE>
<CAPTION>
ORIGINAL ADVANCE MARGIN CALL
COLLATERAL TYPE PERCENTAGE PERCENTAGE
- --------------- ---------- ----------
<S> <C> <C>
STOCKS/BONDS 70% 75%
Listed Stocks (NYSE or ASE)1
(non-purpose loan)
OTC Margin Stocks 70% 75%
(non-purpose loan)
OTC Non-Margin Stocks1 50% 55%
U.S. Government Obligations 90% 95%
U.S. Agency Bonds 80% 85%
State/Municipal Bonds 80% 85%
(A or higher)
Corporate Bonds2 80% 85%
(BAA or higher)
Cash Surrender Value of Life Insurance 95% 95%
NationsBank Deposit Account 100% 100%
Other Federally Insured Deposit Accounts 90% 90%
Mutual Funds (quoted daily in WSJ or Barron's)
Money Market 95% 95%
U.S. Government Obligations 90% 95%
Corporate/Municipal Bonds 80% 85%
Equities 70% 75%
3,196,037 shares of Armor Holdings, Inc., formerly known 40% 50%
as American Body Armor & Equipment stock
</TABLE>
1 Loans for the purpose of purchasing or carrying margin stocks are limited by
Regulation U to a 50% Original Advance Percentage.
2 Does not apply to convertible bonds which are convertible into stocks which
are limited to the applicable percentages for the stock to which they may
convert.
