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 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 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 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 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:
Xxxxxx X. Xxxxxxx
President
ACCEPTED AND AGREED TO:
Xxxxxxxx X. Xxxxxxx
