KANDERS FLORIDA HOLDINGS, INC.
c/o Kane Xxxxxxx, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
January 18, 1996
Xx. Xxxxxxxx X. Xxxxxxx
00 Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Dear Xxxxxxxx:
This document, dated as of January 18, 1996, outlines
certain rights and obligations of Kanders Florida Holdings, Inc.
("KFH") and Xxxxxxxx X. Xxxxxxx ("Xxxxxxx") as of January 18, 1996.
KFH is currently the record owner of at least 4,526,038
shares (the "Common Shares") of the common stock, par value $.03
per share (the "Common Stock"), of American Body Armor & Equipment,
Inc., a Florida corporation (the "Company"), assuming conversion of
all shares of the Company's preferred stock, stated value $1.00 per
share, that are owned by KFH at a conversion price of $.77 per
share and at 110% of the stated value thereof. KFH acquired the
shares of Common Stock of the Company as of January 18, 1996.
Effective on this date, certain rights and obligations of KFH and
Xxxxxxx in, to, and affecting the Common Shares are set forth
herein, reflecting the facts that, on the date of the acquisition
thereof, KFH granted to Xxxxxxx certain beneficial ownership
interests in certain of the Common Shares otherwise acquired by
KFH, and Xxxxxxx agreed to pay to KFH, in consideration of such
grant, an amount equal to the Acquisition Cost (as hereinafter
defined) incurred by KFH with respect to the Common Shares in which
a beneficial interest is granted to Xxxxxxx (the "Xxxxxxx
Acquisition Cost"). Accordingly, the parties hereto agree as
follows:
1. COMPANY STOCK OWNERSHIP.
It is mutually acknowledged and agreed as follows:
(a) that the acquisition cost per share of the
Common Shares owned by KFH and beneficially owned by Xxxxxxx was
$.7384 per share (hereinafter the "Acquisition Cost"); and
(b) that KFH hereby grants Xxxxxxx, subject to the
terms and provisions of this Agreement, a beneficial ownership
interest in and to 7% of the Common Shares, or 316,823 shares of
Xx. Xxxxxxxx X. Xxxxxxx
January 18, 1996
Page 2
Common Stock of the Company, to be effective as of January 18,
1999; provided, however, that, at such time, Xxxxxxx is the
President and Chief Executive Officer of the Company, and Xxxxxxx'x
Employment Agreement with the Company, dated as of the date hereof,
is in full force and effect, and Xxxxxxx is not in breach thereof;
and provided, further, that if Xxxxxxx'x Employment Agreement with
the Company is terminated pursuant to Sections 10(a), (b) or (d)
thereof prior to January 18, 1999, then a pro-rata portion of 7% of
the Common Shares, based upon the number of months elapsed under
this Agreement in relation to 36 months, shall vest to Xxxxxxx on
January 18, 1999, and shall be subject to the terms of this
Agreement. Xxxxxxx expressly acknowledges and agrees that no
interest is hereby granted by KFH to Xxxxxxx in or to any shares of
Common Stock or other equity interests, or in or to any securities
convertible into or exchangeable for shares of Common Stock of the
Company that may be acquired by KFH or Xxxxxx X. Xxxxxxx
individually, or any entity controlled by Xxxxxx X. Xxxxxxx, after
the date hereof. Xxxxxxx further expressly acknowledges and agrees
that Xxxxxxx has no interest in any of such Common Shares from the
date hereof until January 18, 1999, subject to the provisos
contained in the first sentence of this paragraph 1(b), except as
provided in paragraph 4(b) hereof.
2. KFH'S COMMON SHARES.
KFH represents and warrants, and Xxxxxxx
acknowledges, as follows:
(a) 900,000 shares of Common Stock of the Company
owned by KFH are subject to a pledge agreement with Springs
Industries, Inc. and such number of shares of Common Stock are
subject to adjustment pursuant to the terms of such pledge
agreement; and
(b) To KFH's knowledge, the Common Shares owned by
KFH are otherwise unencumbered, except for the beneficial interest
in the Common Shares which KFH has hereby granted to Xxxxxxx
pursuant to paragraph 1(c) hereof.
3. DISPOSITION OF COMPANY STOCK.
(a) KFH agrees that within six (6) months of the
date hereof, Xxxxxxx shall be permitted to sell, solely in
Xx. Xxxxxxxx X. Xxxxxxx
January 18, 1996
Page 3
compliance with applicable laws, rules and regulations, such number
of shares of Common Stock of the Company owned of record by Xxxxxxx
as will result in gross proceeds to Xxxxxxx from such sale of
$150,000. KFH agrees to use its best reasonable efforts to cause
the Company to issue to Xxxxxxx non-qualified stock options to
purchase 50,000 shares of Common Stock, subject to reduction so
that Xxxxxxx shall have the right to purchase such number of shares
of Common Stock as are equal to the number of shares of Common
Stock that are sold by Xxxxxxx as set forth in this paragraph 3(a),
at an exercise price of $1.00 per share of Common Stock. Xxxxxxx
agrees that the timing of such sale will be coordinated in advance
with KFH, but shall be no later than six (6) months from the date
hereof.
(b) If KFH intends to sell in a single transaction
ten percent (10%) or more of the Common Shares owned by KFH, notice
of such intention (the "Sale Notice") shall be given by KFH to
Xxxxxxx not later than fifteen (15) days prior to the intended sale
date.
4. PAYMENT OF THE XXXXXXX ACQUISITION COST.
(a) Upon payment by Xxxxxxx to KFH of the Xxxxxxx
Acquisition Cost, other than in the case of clause (y) of paragraph
4(b) below, KFH shall cause to be issued to Xxxxxxx a stock
certificate for the shares of Common Stock that are the subject of
such payment, with such legends and other provisions as are
required by law. Xxxxxxx'x payment of the Xxxxxxx Acquisition Cost
to KFH may be made at any time, but in no event later than as
provided herein.
(b) Upon KFH's giving a Sale Notice to Xxxxxxx as
a party hereto, Xxxxxxx shall elect, by giving written notice to
KFH within five (5) days of the Sale Notice, to either (x) pay to
KFH an amount equal to the Xxxxxxx Acquisition Cost, or (y) receive
the net proceeds relating to 7% of the Common Shares so sold by
KFH, reduced by the Xxxxxxx Acquisition Cost relating to such
Common Shares. In the event that Xxxxxxx elects to proceed under
clause (y) described above, then Xxxxxxx shall not be entitled to
receive any stock certificates representing such Common Shares, and
shall be deemed to have sold such Common Shares. In the case of
clause (x) above, the full amount of such Xxxxxxx Acquisition Cost
shall be paid to KFH not later than the date of the intended sale
Xx. Xxxxxxxx X. Xxxxxxx
January 18, 1996
Page 4
or, if later, the date that is the fifteenth (15th) day after the
Sale Notice is given by KFH to Xxxxxxx.
(c) If no Sale Notice is provided by KFH to Xxxxxxx
on or before January 18, 2001, Xxxxxxx shall pay to KFH an amount
equal to the Xxxxxxx Acquisition Cost. The full amount of such
Xxxxxxx Acquisition Cost shall be paid to KFH not later than
February 18, 2001.
(d) The amount payable by Xxxxxxx to KFH shall
equal the Xxxxxxx Acquisition Cost as set forth herein without
regard to the price to be paid by the purchaser for any share of
Common Stock of the Company pursuant to a sale giving rise to a
Sale Notice and without regard to any otherwise determined value of
a share of Common Stock of the Company upon any such sale on any
date prior to and including January 18, 2001. In addition, the
Xxxxxxx Acquisition Cost shall also include an interest factor of
8% per annum, compounded monthly, on the amount of the Xxxxxxx
Acquisition Cost, from the date hereof through and including any
payment date of the Xxxxxxx Acquisition Cost, which shall be due
and payable simultaneously with the payment of the Xxxxxxx
Acquisition Cost.
5. MISCELLANEOUS.
(a) The number of the Common Shares in which
Xxxxxxx has a beneficial interest as herein set forth shall be
adjusted to properly reflect the rights granted to Xxxxxxx
hereunder in the event that the Company is affected by
recapitalization, reorganization, reclassification, or a like
event.
(b) Except as set forth in subdivision (c) of this
paragraph 5, Xxxxxxx does not have the right to assign this
Agreement or the rights or benefits hereunder.
(c) This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
trustees, legal representatives, administrators, executors,
successors, and permitted assigns.
(d) All notices, requests, demands and other
communications under this Agreement shall be in writing and shall
Xx. Xxxxxxxx X. Xxxxxxx
January 18, 1996
Page 5
be deemed to have been given when mailed in any United States post
office enclosed in a registered or certified postage prepaid
envelope and addressed to the addresses first set forth above, or
to such other address as any party may specify by notice to other
party given in the manner provided for herein.
(e) This Agreement is made and executed and shall
be governed by the laws of the State of New York.
(f) The parties shall deliver any and all other
instruments or documents required to be delivered pursuant to, or
necessary or proper in order to give effect to, all of the terms
and provisions of this Agreement including, without limitation, all
necessary stock powers and such other instruments of transfer as
may be necessary or desirable to transfer ownership of the Company
Shares, and any filings required under any law or regulation.
The signature of a party to this Agreement represents the
party's assent to the Agreement and the terms hereof.
Very truly yours,
KANDERS FLORIDA HOLDINGS, INC.
By: /s/ XXXXXX X. XXXXXXX
------------------------------
Xxxxxx X. Xxxxxxx
President
ACCEPTED AND AGREED TO:
/s/ XXXXXXXX X. XXXXXXX
--------------------------
Xxxxxxxx X. Xxxxxxx
