DATED 26 NOVEMBER 2003
-----------------------------------------
(1) ARMOR HOLDINGS INC.
(2) ARMOR GROUP LIMITED PARTNERSHIP
(3) ARMOR HOLDINGS MOBILE SECURITY L.L.C.
(4) ARMOR GROUP SERVICES L.L.C.
(5) ARMORGROUP INTERNATIONAL LIMITED
-----------------------------------------
AGREEMENT
for the sale and purchase of ArmorGroup Services
-----------------------------------------
TABLE OF CONTENTS
PAGE
1. INTERPRETATION.....................................................1
2. SALE AND PURCHASE..................................................7
3. COMPLETION AND POST-COMPLETION PAYMENTS...........................10
4. POST COMPLETION UNDERTAKINGS......................................15
5. WARRANTIES........................................................20
6. INDEMNITIES.......................................................21
7. BUYER'S Warranties ...............................................24
8. PROTECTION OF GOODWILL............................................25
9. CONFIDENTIAL INFORMATION..........................................28
10. TAX AFFAIRS.......................................................29
11. ANNOUNCEMENTS.....................................................29
12. ASSIGNMENT........................................................29
13. COSTS.............................................................30
14. EFFECT OF COMPLETION..............................................30
15. FURTHER ASSURANCES................................................30
16. ENTIRE AGREEMENT..................................................31
17. VARIATIONS and third party rights.................................32
18. WAIVER/consents...................................................32
19. INVALIDITY........................................................32
20. NO SET-OFF........................................................33
21. NOTICES...........................................................33
22. COUNTERPARTS......................................................34
24. GOVERNING LAW AND JURISDICTION....................................34
SCHEDULE 1 Particulars relating to the Target Companies........36
SCHEDULE 2 Particulars relating to the Subsidiaries............42
SCHEDULE 3 The Warranties......................................52
SCHEDULE 4 Seller Protection Provisions........................67
SCHEDULE 5 The Properties......................................72
SCHEDULE 6 Additional Consideration............................77
SCHEDULE 7 Resigning Directors.................................80
SCHEDULE 8 Pre-sale Restructuring..............................81
SCHEDULE 9 Inter-Group Payables................................83
Part A ....................................................83
Part B ....................................................85
-i-
TABLE OF CONTENTS
(continued)
PAGE
SCHEDULE 10 Litigation Schedule.................................87
Part A Angolan Litigation..............................87
Part B Bosnian Landmine Claim..........................89
SCHEDULE 11 List of Key Employees...............................90
SCHEDULE 12 Employee Benefits Plans.............................91
SCHEDULE 13 Relevant Security (Clause 15.4).....................93
-ii-
AGREED FORM DOCUMENTS
Non-US Trade Mark Assignment.
Bank of America Release.
Deed of assignment in respect of the UN Contract.
Deeds of release of Bank of Scotland Guarantees
Technology Assignment.
Management Accounts.
Power of attorney regarding voting rights.
Press announcement.
Resignations of directors and secretary.
Tax Deed.
Waiver of Inter-Group Indebtedness.
Trade Mark Assignment
Angolian Litigation Summary
Accounts Schedule
Russian Novation Agreement
Wachavia National Bank Association deeds of release
New Promissory Note
iii
DATED 26 November 2003
PARTIES
(1) ARMOR HOLDINGS, INC. a corporation incorporated under the laws of the
State of Delaware, USA whose principal office is at 1400 Marsh Landing
Parkway, Suite 112, Jacksonville, FL 32250, U.S.A. ("Armor");
(2) ARMOR GROUP LIMITED PARTNERSHIP (acting by its general partner Armor
Holdings GP, LLC) a limited liability partnership formed under the laws
of Scotland whose principal office is at 20 Castle Terrace, Edinburgh,
Scotland (No. SL003883) ("ARMOR GROUP LP");
(3) ARMOR HOLDINGS MOBILE SECURITY, L.L.C. a limited liability corporation
incorporated under the laws of Delaware, USA whose principal office is
at 1400 Marsh Landing Parkway, Suite 112, Jacksonville, FL 32250,
U.S.A. ("ARMOR MOBILE SECURITY");
(4) ARMOR GROUP SERVICES, L.L.C. a limited liability corporation
incorporated under the laws of Delaware, USA whose principal office is
at 1400 Marsh Landing Parkway, Suite 112, Jacksonville, FL 32250,
U.S.A. ("AGS"); and
(5) ARMORGROUP INTERNATIONAL LIMITED, a private limited company
incorporated in England and Wales with Company Number 4931893 whose
registered office is at Brierly Place, New London Road, Chelmsford,
Essex, CM2 0AP ("THE BUYER").
THE PARTIES AGREE AS FOLLOWS:
1. INTERPRETATION
1.1 In this agreement the following words and expressions and abbreviations
have the following meanings, unless the context otherwise requires:
"ACCOUNTS" means the financial statements of each Group Company,
comprising the balance sheet, profit and loss account and cash flow
statement (where applicable) of each Group Company, together in each
case with the notes thereon, directors' report and auditors'
certificate, as at and for the financial period ended on the Accounts
Date to the extent that same are indicated in grey shading to exist on
the Accounts Schedule in the agreed form, true and complete copies of
which are included in the Data Room Information;
"ACCOUNTS DATE" means 31 December 2002;
"ACTUAL RECONCILIATION DATE" shall have the meaning given to the
expression in clause 3.4(B);
"AGAP SHARES" means 29,500 shares of THAI BHAT 100 each of Armor Group
(Asia Pacific) Co. Ltd. (Thailand) (details of which are set out in
schedule 1) representing 49.17 per cent. of its issued stock;
"AGLP GABON SHARES" means 500 shares of XAF 10,000 each of Armor Group
Gabon SA (details of which are set out in schedule 1) representing 50
per cent. of its issued stock;
"AGNA SHARES" means 100 shares of $1 each of Armor Group North America
Inc. (details of which are set out in schedule 1) representing its
entire issued stock;
1
"AGS GABON SHARES" means 500 shares of XAF 10,000 each of Armor Group
Gabon SA (details of which are set out in schedule 1) representing 50
per cent. of its issued stock;
"AHL SHARES" means 11,239,543 ordinary shares of (pound)1 each in the
share capital of Armor Holdings Limited (details of which are set out
in schedule 1) representing its entire issued share capital;
"ARMOR CONFIDENTIAL INFORMATION" shall have the meaning given to that
expression in clause 9.2;
"ARMORGROUP CONFIDENTIAL INFORMATION" shall have the meaning given to
that expression in clause 9.1;
"ASSETS" means the Shares, the UN Contract, the Russian Technology Use
Agreement, the intellectual property rights the subject of the
Technology Assignment, the Trademark Assignment and the Non-US Trade
Mark Assignment;
"ASSOCIATED COMPANY" has the meaning given to it in sections 416 et
seq. of the TA;
"BUSINESS DAY" means a day (excluding Saturdays) on which banks
generally are open in New York for the transaction of normal banking
business;
"BUYER'S GROUP" means the Buyer, the subsidiary undertakings and
associated companies from time to time of the Buyer (including the UK
Buyer and the US Buyer) and all of them and each of them as the context
admits;
"BUYER'S SOLICITORS" means Jones Day Gouldens of 10 Old Bailey, London
EC4M 7NG or, after 28 November 2003, 21 Tudor Street, London, EC4Y 0DJ;
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B;
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto;
"COMPLETION" means the completion of the sale and purchase of the
Assets;
"COMPLETION DATE" means the date on which Completion occurs;
"CONSIDERATION" means the consideration payable by the UK Buyer and the
US Buyer for the Assets, payment of which is to be procured by the
Buyer under this Agreement;
"DATA ROOM INFORMATION" means the materials and information copies of
which are attached to the Disclosure Letter;
"DISCLOSURE LETTER" means the letter of today's date together with the
attachments thereto addressed by Armor to the Buyer, the UK Buyer and
the US Buyer disclosing exceptions to the Warranties;
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" (as such term
is defined in ERISA Section 3(3)) maintained by any member of the
Group;
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set out in ERISA
Section 3(2);
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set out in ERISA
Section 3(1);
2
"ENCUMBRANCE" means all security interests, options, equities, claims,
or other third party rights, including rights of pre-emption of any
nature whatsoever;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended;
"ERISA AFFILIATE" means each person (as defined in Section 3(9) of
ERISA) whether or not incorporated, which is a subsidiary of or under
common control or would be considered a single employer with any member
of the Group within the meaning of Section 414(b), (c), (m) or (o) of
the Code and regulations promulgated under those sections or within the
meaning of Section 4001(b) of ERISA;
"EXCLUDED SUBSIDIARIES" means Armor Products International Limited (no.
00328076), Defence Systems France Sarl (no. 97B06525), Defence Systems
International Africa SA (no. 97B02790) and CDR International Inc.;
"FAIRLY DISCLOSED" means, in the context of the Warranties or
particular matter concerned, that the facts or circumstances giving
rise to any inconsistency therewith and a reasonable assessment of
their consequences are fairly disclosed by the wording of the
Disclosure Letter or the Data Room Information and, in relation to
Warranties 18.4, 18.6, 18.7 and 18.9, by the wording of the documents
listed in or other information contained in schedule 12, the Disclosure
Letter or the Data Room Information;
"FINALLY DETERMINED" means when a matter is agreed between the Buyer,
the UK Buyer or the US Buyer on the one hand and Armor on the other
hand or determined by a Court which has accepted jurisdiction of the
relevant claim and from whose determination there is no right of appeal
or where there is a right of appeal when any appeal is finally refused
or such right of appeal has expired without exercise;
"GABON SHARES" means the AGLP Gabon Shares and the AGS Gabon Shares;
"GROUP" means the Target Companies and the Subsidiaries and "GROUP
COMPANY" means any one of them;
"INDEMNITIES" means the indemnities contained in clause 6.1;
"INTELLECTUAL PROPERTY" means patents, trade marks, service marks,
design rights, registered designs, trade names, interest domain names,
logos, copyrights, (whether registered or not and any applications to
register or rights to apply for registration of any of the foregoing),
rights in inventions, know-how, trade secrets and other confidential
information, and all other intellectual property rights of a similar or
corresponding character in any part of the world;
"INTER-GROUP INDEBTEDNESS" means all debts outstanding from the Group
Companies to members of the Sellers' Group (other than the debts to be
repaid pursuant to clauses 3.4(B) and 3.5);
"KEY EMPLOYEES" means those persons whose names are listed in schedule
11;
"KPMG REPORT" means the financial due diligence report on the Group
prepared by KPMG dated 22 May 2003 (as updated on 1 October 2003);
"MANAGEMENT" means Jerry Hoffman, Christopher Beese, Noel Philp and
Dave Seaton;
"NON-US TRADE MARK ASSIGNMENT" means the assignment in the agreed form
between Armor and the UK Buyer relating to the use of certain marks in
the jurisdictions mentioned therein;
3
"O'GARA SHARES" means 100 shares of O'Gara Security Associates, Inc.
(details of which are set out in schedule 1) representing its entire
issued stock;
"OTHER PLAN" means any other "material employee benefit plan, program
or arrangement" of any kind maintained by any member of the Group in
the United States or on behalf of any United States employee of any
such company, or any dependent or beneficiary of any United States
employee of any such company that it is not an Employee Benefit Plan.
For purposes of this definition, "material employee benefit plan,
program or arrangement" shall mean any plan, program or arrangement for
which the annual liability or expenditure to maintain or provide the
benefits thereunder exceeds $25,000 per annum per such plan, program or
arrangement;
"PARVUS SHARES" means 100 shares of The Parvus Company (details of
which are set out in schedule 1) representing its entire issued stock;
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto;
"PROHIBITED TRANSACTION" has the meaning set out in ERISA Section 406
and Code Section 4975;
"PROMISSORY NOTES" the promissory notes in the original amounts of
(pound)4,635,000 and (pound)3,143,000 both dated 17 April 1997 issued
by Armor Holdings Limited in favour of Armor;
"PROPERTIES" means the properties described in schedule 5 or any part
or parts thereof and "PROPERTY" shall mean any one of them;
"RELATED PERSON" means in relation to any party its holding companies
and the subsidiary undertakings and associated companies from time to
time of such holding company, all of them and each of them as the
context admits;
"REPORTABLE EVENT" has the meaning set out in ERISA Section 4043;
"RUSSIAN NOVATION AGREEMENT" means the novation agreement in the agreed
form between Armor, Armor Group LP, the UK Buyer and OOO ChoP DSL
Eurasia relating to the Russian Technology Use Agreement;
"RUSSIAN TECHNOLOGY USE AGREEMENT" means the Russian Technology Use
Agreement dated 27 November 2000 made between Armor Group LP and DSL
Eurasia;
"SELLERS" means Armor, Armor Group LP, Armor Mobile Security and AGS;
"SELLERS' GROUP" means the Sellers and their subsidiary undertakings
and their associated companies (excluding the Target Companies and the
Subsidiaries) from time to time, and all limited and general
partnerships in which they or any of them from time to time hold fifty
per cent. or more of the limited partnership interests and/or act as
general partner and all of them and each of them as the context admits;
"SELLERS' SOLICITORS" means Ashurst Morris Crisp of Broadwalk House, 5
Appold Street, London EC2A 2HA;
"SHARES" means the AHL Shares, the AGAP Shares, the AGNA Shares, the
Gabon Shares, the O'Gara Shares and the Parvus Shares;
"SUBSIDIARIES" means the companies and limited partnerships listed in
schedule 2 and "SUBSIDIARY" shall mean each and any of them as the
context admits;
4
"TA" means the Income and Corporation Taxes Act 1988;
"TARGET COMPANIES" means Armor Holdings Limited, Armor Group (Asia
Pacific) Co. Ltd. (Thailand), Armor Group North America Inc., The
Parvus Company, Armor Group Gabon SA and O'Gara Security Associates,
Inc. further details of which are set out in schedule 1 and "Target
Company" means any of them;
"TAX" or "TAX" means any tax, and any duty, contribution, impost,
withholding or deduction, levy or charge in the nature of tax, whether
domestic or foreign, and any fine, penalty, surcharge or interest or
costs and expenses payable to a taxation authority connected therewith;
"TAXATION STATUTES" means all statutes, statutory instruments, orders
enactments, laws, by-laws, directives and regulations, whether domestic
or foreign decrees, providing for or imposing any Tax;
"TAX DEED" means a deed of indemnity in the agreed form;
"TECHNOLOGY ASSIGNMENT" means the assignment in the agreed form between
Armor and the UK Buyer relating to the rights the subject of the
Russian Technology Use Agreement;
"TRADE MARK ASSIGNMENT" means the assignment in the agreed form between
Armor and the US Buyer relating to the use of the ARMORGROUP mark,
amongst others, in the United States of America;
"UK BUYER" means ArmorGroup (UK) Limited, a private limited company
incorporated in England and Wales with company number 4969936, whose
registered office is at Brierly Place, New London Road, Chelmsford,
Essex, CM2 8AP;
"UN ASSETS" the UN Contract, together with the aggregate amount paid to
AGS under such contract since 1 January 2003 less the aggregate amount
paid out by AGS since that date to cover costs incurred in performing
such contract and further together with all rights of AGS to the
repayment of any monies owed to it by any member of the Group;
"UN CONTRACT" the benefit, subject to the burden, of the contract dated
3 May 2002 made between (1) The United Nations Office for Project
Services and (2) AGS relating to de-mining operations in Lebanon, as
amended;
"US BUYER" means ArmorGroup International Inc., a corporation organised
under the laws of the State of Delaware, USA, with Tax ID Number (EIN)
43-2034282;
"US COMPANIES" means Armor Group North America Inc., O'Gara Security
Associates Inc. and the Parvus Company and "US COMPANY" shall be
construed accordingly;
"US SHARES" means the Parvus Shares, the O'Gara Shares and the AGNA
Shares;
"US SUBSIDIARIES" means all Subsidiaries owned at Completion directly
or indirectly by a US Company; and
"WARRANTIES" means the warranties set out in schedule 3.
1.2 In this agreement unless otherwise specified, reference to:
5
(A) a "SUBSIDIARY UNDERTAKING" is to be construed in accordance
with section 258 of the Companies Act 1985 and a "SUBSIDIARY"
or "HOLDING COMPANY" is to be construed in accordance with
section 736 of that Act;
(B) a document in the "AGREED FORM" is a reference to that
document in the form approved and for the purposes of
identification signed by or on behalf of each party;
(C) "INCLUDES" and "INCLUDING" means including without limitation;
(D) a "PARTY" means a party to this agreement and includes its
assignees (if any) and/or the successors in title to
substantially the whole of its undertaking;
(E) a "PERSON" includes any person, individual, company, firm,
corporation, partnership, limited liability company,
government, state or agency of a state or any undertaking
(whether or not having separate legal personality and
irrespective of the jurisdiction in or under the law of which
it was incorporated or exists);
(F) a "STATUTE" or "STATUTORY INSTRUMENT" or "ACCOUNTING STANDARD"
or any of their provisions is to be construed as a reference
to that statute or statutory instrument or accounting standard
or such provision as the same may have been amended, replaced,
consolidated or re-enacted before the date of this agreement
(including any subordinate legislation from time to time made
under or pursuant to the statute or statutory instrument or
provision concerned as itself from time to time amended
re-enacted replaced or consolidated);
(G) "CLAUSES", "PARAGRAPHS" or "SCHEDULES" are to clauses and
paragraphs of and schedules to this agreement;
(H) "WRITING" includes any methods of representing words in a
legible form (other than writing on an electronic or visual
display screen) or other writing in non-transitory form;
(I) words denoting the singular include the plural and vice versa
and words denoting any gender include all genders;
(J) the time of day is reference to time in New York;
(K) "$" or "DOLLARS" are to dollars in the currency of the United
States of America; and
(L) "IS MATERIAL IN THE CONTEXT OF THE GROUP AS A WHOLE", for the
purposes of clauses 4.2(D) and 4.2(E) and Warranties 7, 10.1,
10.2(A)5 and 17.7, means that the matter concerned would give
rise to an economic loss of more than $1 million.
1.3 The schedules form part of the operative provisions of this agreement
and references to this agreement shall, unless the context otherwise
requires, include references to the schedules.
1.4 The index to and the headings and the descriptive notes in brackets
relating to provisions of Taxation Statutes in this agreement are for
information only and are to be ignored in construing the same.
1.5 Where it is necessary to determine whether a monetary limit or
threshold set out in schedule 4 or elsewhere in this agreement has been
reached or exceeded (as the case may be) and the liability under the
amount of the claim or claims concerned or other relevant financial
amount is expressed in a currency other than Dollars, the value of that
claim or such financial amount shall be translated into Dollars at the
closing midpoint Dollar spot rate applicable to that
6
amount of non-Dollar currency at (in the case of a claim) the close of
business in New York on the date of receipt by Armor of notification
from the Buyer in accordance with schedule 4 or the Tax Deed of the
existence of such claim or (in any other case) as of the date on which
the calculation is to be made (or if such day is not a Business Day, on
the Business Day immediately preceding such day) as shown in The
Financial Times (New York edition) published on the next following day
or, if The Financial Times is not published on that day or no such spot
rate is available from The Financial Times, at the exchange rate quoted
in writing to the Buyer by Barclays Bank PLC for exchange of such
currency into Dollars on that date.
1.6 Where any sums have fallen due for payment to the Buyer, the UK Buyer
or the US Buyer under the Warranties, the Indemnities or any other
provision of this agreement or under the Tax Deed or other agreement
entered into pursuant to this agreement in a currency other than
Dollars, Armor (or the relevant Seller) shall make such payment in
Dollars (as opposed to the other currency concerned) and in order to
determine the Dollar equivalent of the sum concerned the parties shall
refer to the closing midpoint Dollar rate applicable to that non-Dollar
currency at the close of business in New York on the date that the
requirement to make such payment is Finally Determined (or if such day
is not a Business Day, on the Business Day immediately preceding such
day) as shown in The Financial Times (New York edition) published on
the next following day or if The Financial Times is not published on
that day or if there is no such spot rate available from The Financial
Times the rate quoted to the Buyer by Barclays Bank PLC for exchange of
such currency into Dollars on the day concerned.
2. SALE AND PURCHASE
2.1 Upon the terms and subject to the conditions of this agreement:
(A) Armor shall sell:
1 the AGNA Shares and the Parvus Shares to the US Buyer
(being the entity nominated by the Buyer to acquire
the same), with full title guarantee, free from any
Encumbrance and together with all accrued benefits
and rights attached thereto (including the right to
all dividends and other distributions declared in
respect of any period or payable after the period
ended on the Accounts Date);
2 the trademarks the subject of the Trademark
Assignment to the US Buyer (being the entity
nominated by the Buyer to acquire the same), with
full title guarantee and free from any Encumbrance;
3 the AGAP Shares to the UK Buyer (being the entity
nominated by the Buyer to acquire the same), with
full title guarantee, free from any Encumbrance and
together with all accrued benefits and rights
attached thereto (including the right to all
dividends and other distributions declared in respect
of any period or payable after the period ended on
the Accounts Date);
4 the Intellectual Property the subject of the
Technology Assignment and the benefit (subject to the
burden) of the Russian Technology Use Agreement to
the UK Buyer (being the entity nominated by the Buyer
to acquire the same), with full title guarantee and
free from any Encumbrance; and
5 the trademarks the subject of the Non-US Trademark
Assignment to the UK Buyer (being the entity
nominated by the Buyer to acquire the same),with full
title guarantee and free from any Encumbrance;
7
(B) Armor Group LP shall sell the AHL Shares and the AGLP Gabon
Shares to the UK Buyer (being the entity nominated by the
Buyer to acquire the same), with full title guarantee free
from any Encumbrance and together with all accrued benefits
and rights attached thereto (including the right to all
dividends or other distributions declared or payable in
respect of any period after the period ended on the Accounts
Date);
(C) Armor Mobile Security shall sell the O'Gara Shares to the US
Buyer (being the entity nominated by the Buyer to acquire the
same), with full title guarantee free from any Encumbrance and
together with all accrued benefits and rights attached thereto
(including the right to all dividends and other distributions
declared in respect of any period or payable after the period
ended on the Accounts Date); and
(D) AGS shall sell:
1 the AGS Gabon Shares to the UK Buyer (being the
entity nominated by the Buyer to acquire the same),
with full title guarantee free from any Encumbrance
and together with all accrued benefits and rights
attached thereto (including the right to all
dividends and other distributions declared in respect
of any period or payable after the period ended on
the Accounts Date); and
2 the UN Assets to the UK Buyer (being the entity
nominated by the Buyer to acquire the same)
and in each case the Buyer shall procure that the UK Buyer and the US
Buyer shall purchase the Assets in accordance with the above
provisions of this clause 2.1.
2.2 The Sellers waive and agree to procure the waiver of any restrictions
and pre-emption rights in relation to the transfer of the Shares
(whether under the by-laws of the Target Companies or otherwise).
2.3 The consideration for the sale and purchase of:
(A) the AGNA Shares shall be the sum of $12,860,000 payable to
Armor to be satisfied in cash on Completion;
(B) the Parvus Shares shall be the sum of $1 payable to Armor to
be satisfied in cash on Completion;
(C) the AGAP Shares shall be the sum of $200,000 payable to Armor
to be satisfied in cash on Completion;
(D) the Intellectual Property to be assigned under the Technology
Assignment and the benefit (subject to the burden) of the
Russian Technology Use Agreement shall be $200,000 payable to
Armor to be satisfied in cash on Completion;
(E) the trademarks the subject of the Trade Mark Assignment shall
be $10,000 payable to Armor to be satisfied in cash on
Completion;
(F) the trademarks the subject of the Non-US Trade Mark Assignment
shall be $10,000 payable to Armor to be satisfied in cash on
Completion;
(G) the AHL Shares shall be the sum of $1 payable to Armor Group
LP to be satisfied in cash on Completion;
8
(H) the AGLP Gabon Shares shall be the sum of $1 payable to Armor
Group LP to be satisfied in cash on Completion;
(I) the O'Gara Shares shall be:
1 the sum of $11,870,000 payable to Armor Mobile
Security to be satisfied in cash at Completion; and
2 such amount (if any) calculated to be payable in
accordance with the provisions of schedule 6;
(J) the AGS Gabon Shares shall be the sum of $1 payable to AGS to
be satisfied in cash on Completion;
(K) the UN Assets shall be:
1 the sum of $10,000 payable to AGS to be satisfied in
cash on Completion; and
2 the assumption by the UK Buyer (being the entity
nominated by the Buyer to acquire the same) of all
liabilities of AGS arising under the UN Contract,
together with all obligations and liabilities of AGS
incurred for the purposes of enabling it to perform
its obligations pursuant to such contract (and the
Buyer undertakes to AGS that, with effect from
Completion, it will procure that the UK Buyer
satisfies such obligations in full).
2.4 The Buyer shall procure that at Completion the UK Buyer and the US
Buyer shall pay the Consideration due to the relevant Seller according
to the Assets to be acquired by them respectively as specified in
clause 2.1 and so that the aggregate payments which the Buyer will
procure are made by the UK Buyer and the US Buyer are as follows:-
(A) by the UK Buyer:
1 to Armor $410,000;
2 to Armor Group LP $2; and
3 to AGS $10,001; and
(B) by the US Buyer:
1 to Armor $12,870,001; and
2 to Armor Mobile Security $11,870,000.
2.5 Nothing in this agreement shall oblige the Buyer to buy any of the
Assets or otherwise complete this agreement unless the sale and
purchase of all of the Assets is completed simultaneously.
2.6 The Consideration has been determined on the basis that:
(A) there will be no Inter-Group Indebtedness outstanding
immediately after the Actual Reconciliation Date; and
9
(B) since (and including) 1 January 2003 the Sellers' Group has
not received from the Group any dividend, distribution, loan
or other cash payment or transfer of assets (including by way
of surrender of tax relief, set-off or loan waiver), except:
1 payments made in satisfaction or part satisfaction of
bona fide trading debts in respect of goods supplied
by the Sellers' Group; and
2 under the reorganisation described in schedule 8.
If after Completion the Buyer establishes that (i) (notwithstanding the
waiver to be given pursuant to clause 3.2(E)) any Inter-Group
Indebtedness is still outstanding from the Group to the Sellers' Group
after the Actual Reconciliation Date and/or (ii) that any payments or
assets have been made or transferred by the Group to any members of the
Sellers' Group since 1 January 2003 otherwise than as permitted by
paragraph (B) above or clauses 3.4(B) or 3.5, then Armor shall on
written demand by the Buyer in the case of (i) take such steps and
procure the execution of such documents as shall be necessary to waive
or procure the effective cancellation of the obligations of the Group
to pay such Inter-Group Indebtedness (at no cost to the Buyer's Group)
and in the case of (ii) pay to the Buyer (or the UK Buyer or the US
Buyer as it may direct) an amount equal to the amount or value of the
payments or assets transferred to the Sellers' Group (which Armor
hereby covenants to pay).
2.7 Any dispute as to the quantum of any payment required under clause 2.6
shall if not resolved between the Buyer and Armor within 14 days of the
same arising be referred to an independent chartered accountant for
determination. The independent chartered accountant shall be appointed
by agreement between the Buyer and Armor or in default of such
agreement within three days by the President for the time being of the
Institute of Chartered Accountants in England and Wales on application
by the Buyer or Armor. The determination of such independent chartered
accountant shall be delivered in writing and (in the absence of
manifest error on the face thereof) shall be final and binding on the
parties. His fees and expenses shall be borne as he shall direct in
writing or in the absence of such direction between the Buyer and Armor
in equal portions. Each of the Buyer and Armor shall provide to the
independent chartered accountant such information and assistance as he
shall reasonably require for the purposes of making his determination.
2.8 Where the Buyer procures that either the UK Buyer or the US Buyer shall
acquire any of the Assets under this agreement (i) the agreement so to
acquire and the transfer of such Assets shall for all purposes be
treated as an agreement to transfer and a transfer by the relevant
Seller to the UK Buyer or the US Buyer, as appropriate and (ii) payment
for those Assets shall be treated for all purposes as made by the UK
Buyer or the US Buyer, as appropriate to the relevant Seller. In this
clause 2.8 the "RELEVANT SELLER" means the Seller which owns
beneficially immediately prior to Completion the Assets in question.
3. COMPLETION AND POST-COMPLETION PAYMENTS
3.1 Completion shall take place at the offices of the Buyer's Solicitors
immediately after the execution of this agreement.
3.2 On Completion the Sellers shall deliver to or, if the Buyer shall so
agree, make available to the UK Buyer or the US Buyer, as indicated
below (by way of nomination by the Buyer of the entity to which the
relevant Assets are to be transferred):
(A) share certificates representing the AHL Shares, together with
a stock transfer form relating to all the AHL Shares duly
executed in favour of the UK Buyer;
(B) stock certificates:
10
1 representing the US Shares, together with stock
powers in respect of the transfer of such shares duly
executed in favour of the US Buyer;
2 representing the AGAP Shares, together with stock
powers in respect of the transfer of such shares duly
executed in favour of the UK Buyer and together with
stock powers in respect of the transfer of the Gabon
Shares duly executed in favour of the UK Buyer save
in respect of one share which the Buyer hereby
directs to be transferred to David Seaton as nominee
for the UK Buyer;
(C) resignations in the agreed form of the persons listed in
schedule 7 from their offices as director or secretary of any
Group Company containing a confirmation that they have no
claims (whether statutory, contractual or otherwise) against
any Group Company;
(D) to the extent not in the possession or control of the relevant
Group Company, the statutory books of each Group Company
incorporated in the United Kingdom and in the case of each
other Group Company their equivalent in the jurisdiction of
its incorporation and all books of account concerning the
businesses of any Group Company;
(E) an acknowledgement in the agreed form from Armor to the effect
that, on behalf of itself and the other members of the
Sellers' Group (by whom it confirms it has been authorised to
act), Armor confirms that save for those debts outstanding
from the Group Companies to members of the Sellers' Group to
be paid pursuant to clauses 3.4(B) and 3.5, there will be no
outstanding debt owed by any Group Company to any member of
the Sellers' Group immediately following the Actual
Reconciliation Date and, to the extent that such confirmation
should be inaccurate, waives with effect from the Actual
Reconciliation Date all rights in respect of the same;
(F) the Tax Deed, duly executed by Armor;
(G) the Trade Mark Assignment, duly executed by Armor;
(H) the Non-US Trade Mark Assignment, duly executed by Armor;
(I) the Technology Assignment and the Russian Novation Agreement
duly executed by Armor and, in the case of the Russian
Novation Agreement, Armor Group LP;
(J) a deed of assignment in the agreed form respect of the UN
Contract, duly executed by AGS;
(K) a power of attorney in the agreed form from each of the
registered holder(s) of the Shares other than the US Shares
entitling the UK Buyer or the US Buyer, as appropriate, to
exercise all voting and other rights applicable to the Shares
pending registration of their transfer in the name of the UK
Buyer or the US Buyer, as appropriate;
(L) the share certificates or other documents of title in respect
of all shares or limited partnership interests (as applicable)
in those of the Subsidiaries incorporated or otherwise
existing under the laws of the United Kingdom, the United
States, Colombia, Ecuador and Jersey, together with:
11
1 to the extent not in the possession of a Group
Company, the share certificates or other documents of
title in respect of all shares in all other
Subsidiaries where such shares are registered in the
name of a Group Company; and
2 declarations of trust in favour of a Group Company in
respect of all shares in all other Subsidiaries other
than ArmorGroup Peru SAC where such shares are held
by a nominee on behalf of a Group Company, being all
shares not registered in the name of a Group Company,
other than:
(i) 10 per cent (or 300,000) of the issued
shares in the capital of Mozambique Mine
Action Limited and owned by Chimbabaira
Limitada;
(ii) 2.5 per cent (or 57,000) of the issued
shares in the capital of Defense Systems
Colombia SA owned by Norman Charles Weston;
(iii) one per cent of the issued share capital of
Armor Group Mozambique Ltd and owned by Dr T
A Waty; and
(iv) 26 per cent of the issued shares in the
capital of O'Reilly Vernier & Gurkha
Singapore Private Limited owned as follows:
Wong Siew Mei - 5 per cent; and
Wilfred Douglas Anthony - 21 per cent;
(M) a letter of resignation from the auditors of each Group
Company incorporated in England and Wales;
(N) the title deeds to the property situated at 25 Buckingham
Gate, London, S.W.1;
(O) deeds of release in the agreed form in respect of the release
of each member of the Group from all Encumbrances granted by
it (if so granted by it) in favour of Wachavia National Bank
Association pursuant to an Indenture dated 12 August 2003 (as
supplemented by a first supplemental Indenture dated 30
September 2003) entered into between Armor, the subsidiary
guarantors party thereto and Wachavia National Bank
Association;
(P) a copy letter from the Governor and Company of the Bank of
Scotland ("BANK OF SCOTLAND") confirming that AGS has been
released from the Group's pooled banking arrangements with the
Bank of Scotland and an original deed of release in the agreed
form confirming that all guarantees by any member of the Group
in favour of AGS's liabilities under such pooling arrangements
in favour of the Bank of Scotland have been released;
(Q) a release in the agreed form duly executed by Bank of America,
NA, releasing and discharging each of Armor Group North
America Inc, International Training, Inc, ITI Limited
Partnership, O'Gara Security Associates, Inc. Parvus Crisis
Management Corporation, The Parvus Company, The Parvus
International Information Company and US Defense Systems, LLC
(the "RELEASE COMPANIES") from all guarantees given by them in
respect of the credit agreement dated 12 August 2003 made
between Armor and Bank of America, NA, and releasing and
discharging all security created by the Release Companies in
connection with such credit agreement, and further
12
releasing and discharging all security held by it over (i) any
shares in the Target Companies held by Armor, (ii) the UN
Assets and (iii) the other Assets;
(R) a bank statement from the Bank of Scotland in respect of the
pooled bank account of the Group held with the Bank of
Scotland showing the credit/debit amount of such account as at
the close of business on 25 November 2003;
(S) a letter from KPMG in a form acceptable to the Buyer
evidencing the fact that KPMG has extended its duty of care in
respect of the KPMG Report to the UK Buyer (and Armor hereby
acknowledges receipt of $278,995.13 previously paid on behalf
of the UK Buyer in respect thereof); and
(T) to the extent not included within the Data Room Information,
true and accurate copies of all documentation entered into for
the purposes of giving effect to the re-organisation of the
Group and the waiver or cancellation or other re-organisation
of Inter-Group Indebtedness carried out prior to Completion as
described in schedule 8.
3.3 The Sellers shall procure the passing of board resolutions:
(A) of each Target Company other than the US Companies sanctioning
for registration (subject where necessary to due stamping) the
transfers in respect of, in each case depending on the
relevant Target Company, the AHL Shares, the AGAP Shares and
the Gabon Shares; and
(B) of each Group Company incorporated in England and Wales
resolving to appoint KPMG as auditors and, where applicable,
accepting the resignations of those persons specified in
schedule 7.
3.4 On Completion the Buyer shall:
(A) procure the payment by the UK Buyer and the US Buyer (in
accordance with the apportionments specified in clause 2.4) by
telegraphic transfer of:
1 $13,280,001 to Armor, to the Armor Holdings Inc.
Master Account at Bank of America, 9000 South Side
Boulevarde, Jacksonville, Florida 32256, ABA#
063100277, Account No. 002101236613, in satisfaction
of the consideration for the AGNA Shares, the Parvus
Shares, the AGAP Shares and the Intellectual Property
to be assigned under the Technology Assignment and
under the Trade Mark Assignment and the Non-US Trade
Mark Assignment;
2 $2 to Armor Group LP, to Armor's account referred to
at paragraph (A)1 above, in satisfaction of the
consideration for the AHL Shares and the AGLP Gabon;
3 $11,870,000 to Armor Mobile Security to Armor's
account referred to at paragraph (A)1 above, in
satisfaction of the consideration for the O'Gara
Shares;
4 $10,001 to AGS, to Armor's account referred to at
paragraph (A)1 above, in satisfaction of the
consideration for the AGS Gabon Shares and the UN
Assets;
(B) procure that the sum of $6,200,000 is paid to Armor by way of
telegraphic transfer of funds to the account referred to in
paragraph (A)1 above to be applied as to $4,348,435 in
repayment, on behalf of Armor Holdings Limited, of part of the
13
balance of the Promissory Notes and as to the balance of
$1,851,565 (the "DEFERRED DEBT BALANCE") to be held by Armor
on account of the balance of the inter-group debts due from
members of the Group to members of the Sellers' Group as
identified in Part A of schedule 9 (to the extent that such
debts are ascertained to be valid and outstanding) (the "AG TO
A DEBT"), after accounting for (by way of set-off, where
available) the debts due from the Seller's Group to the Group
specified in that schedule (to the extent that such debts are
ascertained to be valid and outstanding) (the "A TO AG DEBT")
(the net amount being the "NET DEBT"). On or before 5pm
(London time) on 12 December 2003, Armor and the Buyer will
seek to determine (and will provide all reasonable assistance
and information to one another for such purpose):
1. how the Deferred Debt Balance is to be applied in
satisfying, on behalf of the relevant members of the
Group and of the Sellers' Group, as appropriate, the
Net Debt (and the specific debts concerned), or in
each case the relevant proportion thereof, and the
amounts of the AG to A Debt (and the specific debt
concerned) which is to be written off as Intra-Group
Indebtedness (pursuant to the waiver given pursuant
to clause 3.2(E)); and
2. the transactions necessary to arrive at the Net Debt
by applying the Agreed Principles.
If the parties, having negotiated in good faith, are unable to
agree on such matters by 5pm (London time) on 12 December
2003, Armor shall be entitled by written notice to elect for
the Deferred Debt Balance to be apportioned and for the Net
Debt to be arrived at in such manner as it sees fit (subject
always to applying the Agreed Principles) provided that if
Armor fails to serve any such notice by 5pm (London time) on
16 December 2003, the Buyer shall at any time thereafter be
entitled by written notice to Armor to elect for the Deferred
Debt Balance to be apportioned and for the Net Debt to be
arrived at (subject always to applying the Agreed Principles)
as specified in its notice. The parties shall be bound by such
apportionments and determination accordingly and the Buyer
shall procure that, to the extent that after applying the
Agreed Principles any A to AG Debt remains, all members of the
Group irrevocably waive all rights they may have to receive
such A to AG Debt from the Sellers' Group.
For the purposes of this paragraph (B):
the "ACTUAL RECONCILIATION DATE" shall mean the date on which
any apportionments and determination of Net Debt become
effective pursuant to this paragraph (B); and
the "AGREED PRINCIPLES" shall mean the principles whereby:
(a) each debt comprising the A to AG Debt shall be
transferred or novated to the extent necessary to
enable the same to be set-off against the debts
comprising the AG to A Debt (the AG to A Debt also
having been appropriately transferred or novated so
as to enable such set-off to take place) and the
set-offs shall be effected; and
(b) so far as possible, the Deferred Debt Balance shall
be applied to settle trading debt and not funded
debt, with a view to minimising exposure to taxation.
(C) procure that forthwith upon payment of the monies pursuant to
paragraph (B) above, Armor Holdings Limited issues to Armor a
promissory note in the agreed form in respect of the balance
of the promissory notes then outstanding (namely $2,300,000),
as varied and reconstituted in such document; and
14
(D) deliver to Armor:
1. counterparts of the Technology Assignment, the
Russian Novation Agreement, the Trade Mark
Assignment, the Non-US Trade Mark Assignment, the
deed of assignment of the UN Contract and the Tax
Deed, duly executed by the Buyer, the UK Buyer or the
US Buyer, as appropriate; and
2. a letter, or an instruction delivered through SWIFT,
from the Governor and Company of the Bank of Scotland
irrevocably confirming release of the letter of
credit provided by Bank of America, NA as security in
respect of the Group's overdraft facility with Bank
of Scotland or such other evidence of release of such
letter of credit as is reasonably satisfactory to
Armor.
3.5 By way of post-Completion obligations, subject as provided in clause
20.2, the Buyer agrees to procure the following amounts are paid to
Armor (for itself or as otherwise specified below) by or on behalf of
the companies mentioned below and on the dates specified, by way of
telegraphic transfer of funds to the account referred to in paragraph
(A)1 above:
(A) to Armor by Armor Holdings Limited, in full and final
settlement of the balance of the promissory notes issued by
Armor Holdings Limited to Armor as referred to at clause
3.4(C), in the aggregate amount of $2,300,000, to be paid on
the dates specified below:
1. as regards the first $500,000 of such
amount:
Instalment ($) Payment date
-------------- ------------
125,000 31 December 2003
125,000 31 January 2004
125,000 29 February 2004
125,000 31 March 2004
2. as regards the remaining $1,800,000 of such
amount:
Instalment ($) Payment date
-------------- ------------
300,000 31 July 2004
300,000 31 August 2004
300,000 30 September 2004
300,000 31 October 2004
600,000* 25 November 2004
*less the amount to be set-off against such payment pursuant
to clause 20.2
15
(or if any such date does not fall on a Business Day, the
relevant payment shall be made on the next following Business
Day); and
(B) to Armor (on behalf of those members of the Sellers' Group
listed in Part B of schedule 9) by or on behalf of the
relevant Group Company as specified in Part B of schedule 9,
in the aggregate amount of $1,200,679.43, to be paid in three
instalments of $400,226.45, $400,226.45 and $400,226.53 on
each of 31 March 2004, 30 April 2004 and 31 May 2004 (or if
any such date does not fall on a Business Day the relevant
payment shall be made on the next following Business Day),
with each payment to be applied first against the longest
outstanding invoice, but with the deposit, in the case of
payments due to Trasco, being deducted from the two most
recent invoices and with the commissions and deduction re
Colin Stanford, in the case of payments due to Armor Products
International Ltd, being deducted from the three most recent
invoices. Amounts to be paid pursuant to this paragraph (B)
may be paid in the currency in which the relevant invoice was
issued, as stated in Part B of Schedule 9, in which event any
such payment shall be made to such account as Trasco or Armor
Products International Limited (as appropriate) may specify.
Provided that, in the event that the Buyer should fail to
procure any one of the above mentioned payments in this clause
3.5, for value on the "PAYMENT DATE" specified and the same
shall remain unpaid for more than five Business Days from the
Payment Date, or if an administrator or administrative
receiver or other receiver or liquidator (or similar officer)
should be appointed over the Buyer, the UK Buyer, the US
Buyer, Armor Holdings Limited or any Material Subsidiary (each
a "RELEVANT COMPANY") or their respective assets or any
Relevant Company should make or enter into an arrangement or
composition with its creditors generally or make an
application to a court of competent jurisdiction (or filing at
any such court) for protection from its creditors generally
(including, without limitation, proceedings under the
Insolvency Act 1986 (as amended) or chapter 11 of the U.S.
Bankruptcy Code but excluding any bona fide solvent
reorganisation or reconstruction) or should become unable to
pay its debts when due within the meaning of section 123 of
the Insolvency Act 1986, then notwithstanding the payment
schedules set out in paragraphs (A) and (B) above, the full
amount of the balance of the monies shall thereupon become due
and payable upon demand by Armor, and the Buyer shall procure
payment of the same in accordance with any such demand. For
the purpose of this proviso, "MATERIAL SUBSIDIARY" means a
subsidiary of the Buyer incorporated in England and Wales (i)
whose gross assets represent 5 per cent or more of the
consolidated gross assets of the Group; and (ii) whose EBITDA
represent 5 per cent or more of the EBITDA of the Group, in
each case, based on the most recent financial statements of
the Group readily available.
3.6 On or as soon as reasonably practicable after Completion, Armor shall
procure that each member of the Seller's Group to whom payments are to
be made pursuant to clause 3.5(B) formally confirms to the relevant
Group Company the extension to the payment terms of the debts concerned
so as to accord with the dates for payment thereof specified in clause
3.5(B).
3.7 Effective as of the Completion Date, those employees of the Group who
participate in the Armor Holdings, Inc. 401(k) Plan (the "PLAN") (the
"TRANSFERRED EMPLOYEES"), shall cease to participate therein and Armor
Group NA and the other Group Companies shall each withdraw as a
participating employer under the Plan, and Armor shall cause the Plan
to be amended to fully vest the Transferred Employees in their account
balances. Promptly following the Completion Date, Armor shall make
contributions to the Plan of all accrued but unpaid employer and
employee contributions in respect of the Transferred Employees.
16
3.8 The obligations of the Buyer to pay the amounts referred to in clauses
3.4(A) and 3.4(B) shall, for the purposes of effecting Completion, be
deemed satisfied by the delivery by the Buyer's Solicitors to the
Sellers' Solicitors of an undertaking confirming that the Buyer's
Solicitors hold in their client account the sum of $31,360,004 to the
order of Armor and undertaking to instruct their bankers on 27 November
2003 to transfer the Sum to Armor's bank account as soon as reasonably
possible.
4. POST COMPLETION UNDERTAKINGS
4.1 The Buyer undertakes to Armor that, subject to Completion having taken
place:
(A) it shall procure the payment of the amounts referred to in
clause 3.5; and
(B) it will procure that no member of the Group seeks to enforce
as against Armor any right it may have as regards any rebate
of any insurance premiums.
4.2 Armor undertakes to the Buyer that, following Completion, it will:
(A) use all reasonable endeavours to ensure that each Group
Company is released from any guarantee, indemnity, bond,
letter of comfort or Encumbrance or other similar obligation
given or incurred by it prior to Completion which relates in
whole or in part to debts or other liabilities or obligations,
whether actual or contingent, of a member of the Sellers'
Group and pending such release, to pay to the Buyer from time
to time such amounts as would, if paid to the relevant member
of the Group, indemnify the relevant member of the Group
against any liability arising under any such guarantee,
indemnity, bond, letter of comfort or Encumbrance (to the
extent that the relevant member of the Seller's Group does not
itself made good the loss);
(B) procure (subject to any requisite licences being obtainable
and where any payment is required to obtain such licences such
payment to be at the Buyer's cost) that during the period of
30 days following Completion, the Group shall continue to have
access to the computer system of the Sellers' Group operated
in Jacksonville to which the Group currently has access for
the same purposes as currently enjoyed including use of the
Optemize contract arrangements relating to the user of such
computer system and that the Sellers' Group will provide such
assistance as the Buyer may reasonably require for the
purposes of migration of the Group's use of such system to the
Buyer's own discrete computer system it being agreed that if
the Sellers' Group anticipates the need to incur any third
party costs in order to provide such assistance Armor shall,
prior to incurring the same, seek the Buyer's consent in
writing thereto and, to the extent the Buyer has given its
consent in writing, the Buyer shall reimburse such costs on
demand. Armor shall not be required to procure the Seller's
Group to provide any assistance pursuant to this clause 4.2(B)
which requires such costs to be incurred unless the Buyer's
written consent thereto has been first obtained.
(C) to the extent that it is not prevented from so doing by any
obligation of confidentiality (whether or not legally
binding):
1 make available to the Buyer and (subject as provided
below in this paragraph (C)) to Granville Baird
Capital Partners Limited copies and/or extracts from
such of Armor's records and papers concerning the
process undertaken by or on behalf of Armor in
seeking purchasers for the Group as Armor in good
faith considers appropriate with a view to assisting
the Buyer and/or Granville Baird Capital Partners
Limited identify potential purchasers of the Group in
the future and address possible obstacles to
achieving such a sale; and
17
2 if so required by the Buyer, authorise Trevor Civval
of Cavendish Corporate Finance Limited and/or Merrill
Lynch & Co. Inc. (together with its subsidiaries,
agents, employees and consultants) to discuss such
sale process and the matters set out above with the
Buyer and Granville Baird Capital Partners Limited,
subject to such restrictions as Armor may in good
faith consider appropriate.
All and any information provided to the Buyer and/or Granville
Baird Capital Partners Limited pursuant to this paragraph (C)
shall constitute Armor Confidential Information and Armor
shall be under no obligation to provide the same to or to
authorise Trevor Civval and/or Merrill Lynch & Co. Inc. to
enter into discussions with Granville Baird Capital Partners
Limited unless and until Armor has received an undertaking
from Granville Baird Capital Partners Limited, addressed to
Armor and in such form as Armor may reasonably require,
undertaking to be bound by confidentiality obligations in
respect of the same in the terms of clause 9.2; and
(D) if it is discovered that the share capital of any of the
Target Companies or companies within the Group to be acquired
pursuant to this Agreement or any beneficial interest therein
has not been acquired in accordance with this Agreement for
any reason whatsoever (excluding for such purposes any
minority shareholdings in any such companies beneficially
owned by third parties and Fairly Disclosed to the Buyer
before entry into of this Agreement) and the loss arising from
one or more such circumstances is material in the context of
the Group as a whole, procure that all and any such share
capital or beneficial interests, as appropriate, are
transferred to the Buyer or as the Buyer may direct in writing
free from any Encumbrance for no additional consideration; and
(E) if any person attempts to declare as void any transaction
effected prior to Completion which concerns title to any of
the Shares or any of the share capital of any of the
Subsidiaries on grounds that such transaction may justly be
challenged under any applicable laws relating to insolvency
and the transaction concerned took place whilst both parties
to it were under the direct or indirect control of Armor and
the loss arising (or which would arise should such attempt
succeed) from one or more such circumstances is material in
the context of the Group as a whole, procure that before any
order for the setting aside of such transaction is made, and
with the purpose of preventing it being made, the person on
whose behalf such transaction is sought to be set aside is
irrevocably and unconditionally put in funds (so that such
funds are free funds in the hands of that person without any
liability to account to the provider thereof for the same) to
such amount as is required to prevent such transaction being
set aside.
4.3 The Buyer undertakes to Armor that, following Completion, the Buyer
will or will procure that the UK Buyer or the US Buyer will:
(A) use all reasonable endeavours to ensure that Armor is released
from all obligations it may have in respect of:
1 the performance and payment bonds each numbered
104034207 dated 24 June 2003 issued by Travelers
Casualty and Surety Company of America in favour of
Kellog & Root Services in respect of certain
obligations of ArmorGroup North America; and
2 the licence bond numbered 104090976 (Fianzas Atlas #
III-310195-RC) Effective 3/3/03 - 3/2/04 issued in
favour of certain obligations of ArmorGroup Mexico SA
de CV
18
and pending such release, to indemnify Armor against liability
arising under any such bond Provided that the Buyer shall be
automatically released from its obligation to procure the
release of such bonds if and to the extent any such bond
expires by the effluxion of time;
(B) procure that, as soon as reasonably practicable after
Completion and in any event within six months thereafter, the
Group shall cease in any manner whatsoever to use, or display
any trade or service marks, trade or service names or logos
used or held by any member of the Sellers' Group (other than
"CDR" or "USDS") or any confusingly similar mark, name or logo
including but not limited to the name "ARMOR" or "ARMOR
HOLDINGS" save as used in the marks or names "ARMORGROUP".
4.4 Within the periods mentioned below according to the territory concerned
the Buyer shall procure all companies in the Group with names which
include "Armor Group" shall change their corporate names to
"ArmorGroup" or any other corporate name not restricted pursuant to
clause 4.3(B) and Armor shall procure that any companies within the
Sellers' Group with names which include "Armor Group" or "ArmorGroup"
shall change their corporate names to exclude such references and to
such names as are not restricted by clause 8.1(E). The periods
mentioned above are as follows:
Period Territory
9 months North America and Europe
36 months Africa and Russia
24 months rest of the World
4.5 The following provisions shall apply with regard to elections to be
made under Section 338(h)(10) of the Unites States Internal Revenue
Code of 1986, as amended:
(A) with respect to the Sellers' sale of the US Shares (and,
indirectly, the US Subsidiaries) to the US Buyer (as directed
by the Buyer), the Sellers, the Buyer and the US Buyer shall,
where permissible, jointly make timely, effective and
irrevocable elections under Section 338(h)(10) of the United
States Internal Revenue Code of 1986, as amended (the "CODE"),
and, if permissible, similar elections under any applicable
state or local income tax laws (the "ELECTIONS"), and file the
Elections in accordance with applicable regulations. The US
Buyer, the Sellers, the US Companies and the US Subsidiaries
shall report the transaction consistent with such Elections
and agree not to take any action that could cause such
Elections to be invalid, and shall take no position contrary
thereto unless required to do so pursuant to a determination
(as defined in Section 1313(a) of the Code) or any similar
state or local Tax provision. The Sellers shall bear the
responsibility for payment of any US federal, state, local or
foreign Tax attributable to making the Elections, and shall
promptly reimburse the Buyer, the US Buyer, the US Companies
or the US Subsidiaries to the extent any of the Buyer, the US
Buyer, the US Companies or the US Subsidiaries incur any Tax
Liability arising from such Election, including any state or
local liability to Tax attributable to a deemed election under
Section 338(g) of the Code;
(B) to the extent possible, the Buyer, the US Buyer, the Sellers,
the US Companies and the US Subsidiaries shall execute at the
Completion any and all forms necessary to effectuate the
Elections (including, without limitation , IRS Form 8023 and
any similar forms under applicable state and local income tax
laws (the "SECTION 338 FORMS")). In the event, however, any
Section 338 Forms are not executed at the Completion, the
Buyer, the US Buyer, the Sellers, the US Companies and the US
Subsidiaries shall prepare and complete each such Section 338
Form not later than 15
19
days prior to the date such Section 338 Form is required to be
filed. The Buyer, the US Buyer, the Sellers, the US Companies
and the US Subsidiaries shall each cause the Section 338 Forms
to be duly executed by an authorised person for the Buyer, the
US Buyer, the Sellers, the US Companies and the US
Subsidiaries in each case, and shall duly and timely file the
Section 338 Forms in accordance with applicable tax laws and
the terms of this Agreement;
(C) the Buyer and the US Buyer shall prepare a schedule setting
out the fair market value of the assets of the US Companies
and the US Subsidiaries and the allocation of the aggregate
deemed sales price of the assets of the US Companies and the
US Subsidiaries resulting from the elections under Section
338(h)(10) of the Code (as required pursuant to Section
338(h)(10) of the Code and the Treasury Regulations
promulgated thereunder) (the "SECTION 338 ALLOCATION") and
shall deliver such Section 338 Allocation to the Sellers for
their review within 170 days after the Completion Date. The
Section 338 Allocation shall be prepared in accordance with
the rules under Sections 1060 and 338 of the Code, as
applicable. The Sellers shall have thirty (30) days to review
and comment on the Section 338 Allocation prepared by the
Buyer and the US Buyer, provided that if the Buyer and/or the
US Buyer deliver the Section 338 Allocation to the Sellers
prior to the 170th day following the Completion Date, such
period of review and comment shall extend to the 200th day
following the Completion Date (the "REVIEW PERIOD"). If the
Sellers and the Buyer and/or the US Buyer are unable to agree
on the Section 338 Allocation during the Review Period, they
shall request a nationally recognised accounting firm within
the United States of America to prepare such Section 338
Allocation (subject to the limitation contained in the
immediately preceding sentence). The cost of any such firm
shall be borne equally by the US Buyer, on one hand, and the
Sellers, on the other. In the event the Section 338 Allocation
is audited or disputed by any Tax authority, the party
receiving notice thereof shall promptly notify the other party
hereto. The Buyer and the US Buyer shall, at their own
expense, control all audits or disputes in connection with any
Section 338 Allocation (including selection of legal advisers
and accountants) and, without limiting the foregoing, may in
their sole discretion pursue or forego any and all
administrative appeals, proceedings, hearings, audits and
conferences with any Tax authority in connection therewith,
subject to the last sentence of this paragraph (C).
Notwithstanding the foregoing, (i) the party controlling the
audit or dispute shall (A) consult with the other party prior
to taking any action in connection with such audit or dispute
that could reasonably be expected to have a material adverse
effect on such other party and (B) not take any action in
connection with such audit or dispute that would legally bind
the other party without the prior written consent of such
other party and (ii) each of the Buyer and the US Buyer and
the Sellers shall (A) be bound by the Section 338 Allocation
for purposes of determining any Taxes, (B) prepare and file,
and cause its affiliates to prepare and file, its Tax returns
on a basis consistent with the Section 338 Allocation and (C)
take no position, and cause its affiliates to take no
position, inconsistent with the Section 338 Allocation on any
Tax return, in any refund claim, in any audit, dispute or
proceeding before any Tax authority or otherwise with respect
to such Tax returns; and
(D) where any obligation is expressed in this clause 4.5 to be an
obligation of any of the US Buyer, the US Companies or the US
Subsidiaries, such obligation shall be deemed to be an
obligation of the Buyer to procure the performance by the US
Buyer, the US Companies and the US Subsidiaries, as
applicable, of that obligation.
4.6 The Buyer undertakes to Armor as follows with regards to the carrying
on of business in the Republic of Angola ("ANGOLA"):
20
(A) the Buyer shall not and shall procure that no member of the
Buyer's Group shall carry on business in Angola for a period
commencing on the date of this Agreement and expiring on the
earlier of (i) the first anniversary of that date and (ii) the
date upon which the Angolan Litigation is Determined (the
"LOCK-OUT PERIOD"). For this purpose "DETERMINED" shall mean
when the matter is agreed between the parties to the Angolan
Litigation or determined by a French Court from whose
determination there is no right of appeal or where there is a
right of appeal when any appeal is finally refused or such
right of appeal has expired without exercise; and
(B) if the Buyer or any member of the Buyer's Group shall, after
expiry of the Lock-out Period carry on business in Angola then
the Buyer shall and shall procure that the relevant member(s)
of the Buyer's Group carrying on business in Angola shall:
1 comply in all material respects with the laws and
statutory regulations applicable to the carrying on
in Angola of such business;
2 not carry on such business under any names which
include any of "ArmorGroup", "DSL", "Defense
Systems", "Armor" or any derivative thereof provided
that the Buyer shall not be in breach of the
undertaking in this paragraph 2 merely by virtue of
the fact that any company or other person through
which it may carry on such business in Angola is
connected with companies bearing such names by virtue
of common ownership provided such connection is not
actively promoted by the Buyer's Group in Angola; and
3 not be a member of the Group nor a company whose
share capital is owned or held by any member of the
Group.
The undertakings set out in this clause 4.6 shall cease to apply when
the Angolan Litigation has been Determined.
4.7 The Buyer acknowledges and agrees (subject to the Court's discretion)
that in the event of a breach of its undertakings in clauses 4.6(A),
4.6(B)2 and 4.6(B)3 damages may not be an adequate remedy and that the
most appropriate remedy available to Armor may be an order for specific
performance.
4.8 Armor undertakes to the Buyer that it shall fully enforce all its
rights under Section 9.1 and 9.2 of each of the Armor Holdings, Inc.
1999 Stock Incentive Plan and the Armor Holdings, Inc. 2002 Stock
Incentive Plan (together the "PLANS") in respect of each exercise of
any option granted under either of the Plans and shall in all cases
require the Participant (as defined in the Plans) to remit to Armor an
amount sufficient to satisfy any and all federal, state and local
withholding tax requirements on the exercise of the relevant option (by
way of allowing a withholding of Shares as described in Section 9.2 of
the Plans if appropriate).
5. WARRANTIES
5.1 Armor warrants to the Buyer on behalf of the UK Buyer and the US Buyer,
according to the Assets to be acquired by them pursuant to this
Agreement (and so that they shall be entitled to enforce the same
direct against Armor notwithstanding that they are not a party to this
Agreement), that:
(A) the Warranties numbered 1 (Sellers' Capacity), 2.2 (The
Shares) and 2.3(D) (Subsidiaries - Encumbrances) are true and
accurate; and
21
(B) all the Warranties other than those referred to in paragraph
5.1(A) are, so far as Armor is aware, true and accurate.
5.2 Any Warranty expressed to be given "so far as Armor is aware" or
otherwise qualified by reference to the knowledge of Armor shall refer
to the actual knowledge immediately before Completion of any of Robert
Schiller, Glenn Heiar, Phil Baratelli or Todd Smith without their
having made enquiries of any person to establish the truth and accuracy
of that Warranty Provided that each of Robert Schiller, Glenn Heiar,
Phil Baratelli and Todd Smith will be deemed to be actually aware of
all information of which he ought reasonably to be aware were he to
have reviewed in a reasonably diligent manner the hard copy documents
within his own files (and not, for the avoidance of doubt, the files of
any other officer or employee of Armor) located at the offices of Armor
at 1400 Marsh Landing Parkway, Suite 112, Jacksonville in existence as
at (or following) 11 November 2003 for the avoidance of doubt "hard
copy documents" does not include any documents which is only in
electronic form, including emails. For the purpose of this clause 5,2
"files" shall include papers in filing cabinets, boxes, binders, wallet
files and other methods of document storage.
5.3 Any claim under the Warranties is subject to the terms and provisions
of schedule 4.
5.4 Each of the Warranties shall be construed as a separate Warranty and
shall not be limited by reference to any of the others of them.
5.5 When calculating any damages due in respect of any breach of the
Warranties due regard shall be had to the fact that the Buyer has
valued the Assets at $33,660,004 on the basis that all of the
Warranties are true and accurate. This clause 5.5 is without prejudice
to the limitation contained in paragraph 3 of schedule 4.
5.6 Each of the Sellers hereby irrevocably waives all rights and claims
which it may have against any Group Company and/or officer or employee
thereof in respect of any misrepresentation inaccuracy or omission in
or from any information or advice given where any such Group Company or
officer or employee to such Seller or a member of the Sellers' Group to
enable it to give any of the Warranties and/or to prepare the
Disclosure Letter and/or to assume any of the obligations assumed or to
be assumed by it under or pursuant to this agreement provided that this
clause 5.6 shall not operate to exclude liability for any fraudulent
misrepresentation.
5.7 Armor hereby covenants with the US Buyer to pay from time to time to
the US Buyer an amount equal to any amount payable (but for the
provisions of this clause 5.7) by Armor to the UK Buyer in respect of a
claim for breach of any of the Warranties Provided that:
1 to the extent that Armor makes any such payment to the US
Buyer, notwithstanding any other provision of this agreement,
the liability of Armor in respect of the relevant claim for
breach of the Warranties shall be reduced;
2 to the extent that Armor satisfies any claim by the UK Buyer
for breach of any of the Warranties, the liability of Armor to
make any payment pursuant to this clause 5.7 shall be reduced;
and
3 the limitations of liability of Armor in respect of claims
under the Warranties contained in schedule 4 shall apply
mutandis mutatis in respect of claims under the covenant
contained in this clause 5.7.
6. INDEMNITIES
6.1 Armor undertakes to the US Buyer (and so that the rights under this
clause 6 shall be fully enforceable by the US Buyer direct against
Armor notwithstanding that it is not party to this
22
Agreement) to pay to the US Buyer from time to time and promptly upon
demand such sums as would, if paid to the relevant member or members of
the Buyer's Group, indemnify such member or members of the Buyer's
Group against all liabilities and losses which it or they may suffer
and all costs and expenses which it or they may reasonably incur
(provided that, save in the case of paragraph (D) below, such costs and
expenses are approved by Armor in writing in advance where reasonably
practicable, such approval not to be unreasonably withheld or delayed)
to the extent the same arise or are incurred as a result of or in
connection with:
(A) the matters described in part A of schedule 10 (the "ANGOLAN
LITIGATION");
(B) the potential litigation described, at paragraph 1, in the
letter from the Sellers' Solicitors to the Buyer's Solicitors
dated 26 November 2003 and headed "Centurion - Indemnity for
Potential Payments";
(C) the matters described in part B of schedule 10 (the "BOSNIAN
LANDMINE CLAIM");
(D) the potential payments and/or liabilities which may be paid or
become due and which are described, at paragraph 2, in the
letter from the Sellers' Solicitors to the Buyer's Solicitors
dated 26 November 2003 and headed "Centurion - Indemnity for
Potential Payments" ("RELEVANT CIRCUMSTANCES") including any
payment made by any such Group Company in connection with the
Relevant Circumstances following agreement of the same with
the recipient thereof (the "POTENTIAL CLAIMANT") and whether
or not any such payment comes about as a result of a formal
claim made by the Potential Claimant against any Group Company
and Armor shall not be entitled to be consulted in connection
with any such payment or the settlement or determination of
the same. Notwithstanding the introductory paragraph to this
clause 6.1, the indemnity in this paragraph (D) shall extend
to any payment whatsoever made in connection with the Relevant
Circumstances but Armor's liability under such indemnity shall
be limited to an amount equal to fifty per cent of the sum for
which Armor would be responsible in the absence of such
limitation and shall be limited to a maximum amount of
$125,000; and
(E) the reorganisation of the Group and the waiver or cancellation
or other reorganisation of Inter-Group Indebtedness carried
out on or prior to Completion as described in schedule 8 to
the extent that the liabilities concerned are not liabilities
for Tax.
6.2 The provisions of schedule 4 shall apply in relation to any claim under
clause 6.1 to the extent set out in schedule 4. In addition:
(A) no liability shall attach to Armor in respect of any claim
under the Indemnities to the extent that the loss or damage
giving rise to the claim is recovered by the Group under any
insurance policy (and the Buyer shall procure that where any
amount is recovered by the Group under any such insurance
policy in relation to the subject matter of the claim
concerned subsequent to any payment made by Armor, the US
Buyer shall reimburse to Armor an amount equal to the amount
recovered promptly following such recovery having been made).
The Buyer undertakes to Armor that where any matter which
gives rise to a claim under the Indemnities is a matter in
respect of which a member of the Group carries insurance, the
Buyer will procure that that member of the Group uses all
reasonable endeavours to recover the maximum amount
recoverable from the relevant insurance provider. If Armor is
relieved of any liability to make any payment in respect of
the Indemnities, or is reimbursed in respect of any payment
made by it in respect of the Indemnities, in either case as a
result of the operation of the above provisions of this
paragraph (A), Armor shall promptly following receipt of the
benefit of such relief or receipt of the
23
reimbursement, as appropriate, pay to the US Buyer an amount
equal to five per cent of the amount not paid or the amount
reimbursed, as appropriate; and
(B) any liability of Armor under clause 6.1 (before the operation
of this paragraph (B)) shall be reduced by an amount equal to
(i) any tax relief obtained or obtainable by the Buyer's Group
and (ii) the amount by which any taxation for which the
Buyer's Group is or may be liable to be assessed or
accountable is reduced or extinguished, in either case to the
extent that the same arises in consequence of the matter which
gives rise to the liability of Armor under clause 6.1 Provided
that Armor shall not be entitled to the benefit of this
paragraph (B) unless and until the date (the "BENEFIT DATE")
being the earlier of (a) the date on which the Group receives
the benefit of the tax relief in question or has not had to
pay (or would not have had to pay but for the availability of
any other tax relief) the relevant tax, as the case may be,
and (b) the date falling 12 months after the date on which
Armor makes the relevant payment under clause 6.1 and further
provided that no such reduction of Armor's liability under
clauses 6.1 shall apply where (b) applies if at such time no
such tax reliefs are available or the Buyer's Group has no
liability to taxation which may be so reduced or extinguished.
The Buyer shall procure that where by virtue of the operation
of this paragraph (B) Armor has overpaid an amount due to the
US Buyer as a result of a claim by the US Buyer under any of
the Indemnities, the US Buyer shall reimburse to Armor an
amount equal to the overpayment promptly following the benefit
date.
6.3 Subject to clause 6.6, the Buyer (having made reasonable enquiries of
each member of the Group and in particular ArmorGroup Services Limited,
Armor Group (Asia Pacific) Co. Ltd. (BVI) and Armor Holdings Limited to
ascertain the facts and circumstances then existing) shall promptly:
(A) inform Armor in writing of any fact, matter, event or
circumstance which comes to its notice whereby it appears to
the Buyer that Armor is or may be liable to make any payment
in respect of any claim under the Indemnities;
(B) thereafter keep Armor reasonably informed of all material
developments in relation thereto; and
(C) provide at the cost of Armor all such information and
documentation (no matter how it is recorded or stored) as
Armor shall reasonably request in connection therewith and, in
connection with the Angolan Litigation, actively assist Armor
(at Armor's cost) where such assistance is reasonably required
for the benefit of pursuing such litigation (but having regard
to the fact that Armor shall have conduct thereof) including
if so required by Armor using reasonable endeavours to procure
that any relevant employees of the Group provide affidavit
evidence in support of Armor's claim that the Group has not
been engaged in Angola since January 1998.
6.4 Subject to clause 6.6, the Buyer undertakes to Armor that it will (and
that it will procure that the relevant members of the Buyer's Group
will) accept that Armor shall (as it hereby agrees) have sole conduct
of all discussions and negotiations in relation to any claim which
gives rise to or may give rise to any claim by the Buyer or the UK
Buyer or the US Buyer under any of paragraphs (A), (B), (C) or (E) of
clause 6.1 (including any proceedings or actions brought against the
any member of the Buyer's Group or the Sellers' Group), including the
right to conduct any such proceedings or actions in its own name or in
the name of any member of the Buyer's Group.
6.5 Subject to clause 6.6, the Buyer undertakes to Armor that it will (and
that it will procure that each member of the Buyer's Group will)
provide promptly to Armor (at Armor's cost) all information, documents
and assistance which Armor might reasonably request in relation to
24
any proceedings arising out of the circumstances mentioned in clause
6.1 including using its reasonable endeavours to ensure that officers
or employees of the Group Companies are made available to give evidence
before any court, enquiry, tribunal or similar forum as and when
reasonably requested by Armor upon reasonable notice.
6.6 Nothing in clauses 6.3, 6.4 and 6.5 shall oblige the Buyer or any
member of the Buyer's Group:
(A) to supply any information or assistance to the Sellers or any
members of the Sellers' Group to the extent that provision is
prohibited by law (provided that Armor shall retain any
information provided in breach of any obligations of
confidentiality in force at Completion as confidential, save
that it may disclose the same to its professional advisers and
otherwise in the course of any discussions or negotiations
with any person a party to any claim which gives rise to or
may give rise to any claim by the Buyer under clause 6.1 or in
any proceedings relating thereto); or
(B) to do or (insofar as required by any member of the Sellers'
Group or their representatives) to refrain from doing anything
which is unlawful; or
(C) to provide the services and assistance of its officers and
employees as contemplated by clause 6.5 to the extent it would
in the reasonable opinion of the Buyer unreasonably interfere
with the day to day operations of the business carried on by
the Buyer's Group and in any event unless the Sellers have
agreed to pay a reasonable fee to compensate the Buyer's Group
for the use of the management and employment time concerned.
6.7 Armor shall procure that the Buyer is kept informed of all material
matters and developments arising out of any conduct by the Armor or any
members of the Sellers' Group or their representatives of any matters
contemplated by clause 6.4 and shall provide to the Buyer or members of
the Buyer's Group such information and assistance relating thereto and
to the matters referred to in clause 6.1 (to the extent relevant to the
Group or to the Buyer's Group's obligations under this clause 6) as it
may reasonably request from time to time. In no circumstances will
Armor or any members of the Sellers' Group or their representatives
enter into or purport to enter into any settlement, compromise or other
material agreement in relation to the conduct of such matters or the
subject matter thereof without the prior written consent of the Buyer,
such consent not to be unreasonably withheld or delayed and in any
event without first providing evidence to the Buyer that the Buyer's
Group will be fully funded (without recourse) for any of its
obligations under the settlement compromise or other agreement
concerned.
7. BUYER'S WARRANTIES
7.1 The Buyer warrants to the Sellers that (and each such warranty shall be
construed as a separate warranty):
(A) the execution and delivery of this agreement and the
completion of the transactions contemplated hereby, have,
where required, been duly and validly authorised and no other
proceedings or action on the part of the Buyer, the US Buyer
or the UK Buyer is necessary to authorise the agreement or to
complete the transactions so contemplated;
(B) there is no agreement, arrangement or understanding (whether
verbal or in writing) in relation to the transactions
contemplated by this agreement between any member of the
Buyer's Group and any Key Employee which is materially
different to the financial arrangements set out in the offer
letter from Granville Baird Capital Partners
25
Limited to the Management dated 5 September 2003, a copy of
which Armor acknowledges it has received and read;
(C) it is a limited company duly incorporated under the laws of
the jurisdiction of its incorporation and has been in
continuous existence since incorporation;
(D) it has all corporate power and has obtained all corporate
authorisations and all other applicable governmental,
statutory, regulatory, or other consents, licenses, waivers,
or exemptions required to empower it to enter into and to
perform its obligations under this agreement;
(E) the execution, delivery and performance of this agreement by
the Buyer do not violate or conflict with:
1 any applicable law or any writ, order or decree of
any court or governmental authority;
2 any provision of the Buyer's formation or governance
documents, or
3 any material agreement to which the Buyer is a party
or by which the Buyer is bound.
7.2 The Buyer warrants to Armor that it has received and read a copy of the
English translation of the pleadings in the Angolan Litigation in the
agreed form.
8. PROTECTION OF GOODWILL
8.1 Armor hereby undertakes to the Buyer for itself and on behalf of the UK
Buyer and the US Buyer to procure that (except as otherwise agreed in
writing with the Buyer) no member of the Sellers' Group will either
solely or jointly with any other person (either on its own account or
as the agent of any other person) and directly or indirectly:
(A) for the Restricted Period in the Restricted Territories carry
on or be engaged or (except as the holder of shares in a
company which confers not more than five per cent. of the
votes which can generally be cast at a general meeting of the
company) interested directly or indirectly in a business which
provides close quarter defence (CQD) training, remote site
security services, man-guarding services, security consultancy
services, humanitarian mine clearing services, investigation
services, security training, lethal fire arm training, driver
training, close protection training or dog training or which
otherwise competes with any business carried on by a Group
Company at Completion (each "A PROTECTED BUSINESS"); and/or
(B) for a period of three years from Completion induce, solicit or
endeavour to entice to leave the service or employment of any
member of the Group, any person who at Completion was an
employee of any member of the Group occupying a senior or
managerial position and likely (in the reasonable opinion of
the Buyer) to be:
1 in possession of ArmorGroup Confidential Information
relating to any member of the Group; or
2 able to influence the customer relationships or
connections of any member of the Group
provided that this shall not restrict any member of the
Sellers' Group from advertising or otherwise taking steps to
recruit (and/or from subsequently employing) any person
26
which is or are not specifically aimed at or intended to
recruit a particular employee or group of employees of any
Group Company save that if any of the Key Employees responds
to such advertisement or recruitment process Armor will not,
and will procure that no member of the Sellers' Group will,
employ such person; and/or
(C) for a period of three years from Completion prevent or
restrict any person who at any time in the period of 12 months
prior to Completion has been a client or customer of a
Protected Business from continuing such client or customer
relationship with the Group or endeavour to supply services to
any such client or customer in competition with any Protected
Business; and/or
(D) for a period of three years from Completion prevent or
restrict any person firm or company (other than a member of
the Sellers' Group) which at any time in the period of 12
months prior to Completion has been a supplier of goods or
services in connection with any Protected Business from
supplying such goods or services to any member of the Group,
where the cessation or restriction of such supply will or
could reasonably be expected to have a materially adverse
effect on or cause material loss to any member of the Group;
and/or
(E) at any time after Completion use any of the names
"ArmorGroup", "DSL", "Defense Systems", "ITI", "International
Training", "Parvus", "Mine Action", "APS", "Alarm Protection
Services", "Site Logistic", "Vulcano", "Special Clearance
Services" or any name similar thereto or likely to be confused
therewith, other than the name "Armor" or "Armour" (whether
alone or in conjunction with any other name provided that it
is not used as part of the name "ArmorGroup" or "ArmorGroup"),
nor at any time after the expiry of six months from Completion
use the name "CDR" or "USDS" or any name similar thereto or
likely to confused therewith.
for the purposes of this clause 8:-
"RESTRICTED PERIOD" shall mean the period of three years in relation to
territories within the European Union and five years elsewhere; and
"RESTRICTED TERRITORIES" means all and any of the following countries
together with any other countries in which the Group carries on
business or intends to carry on business imminently (that is to say,
within the next six months, if possible) and has made preparatory steps
(or more) towards achieving such goal:
Afghanistan, Algeria, Bahrain, Bosnia, Cambodia, Cameroon, Chad, China
inc Hong Kong, Colombia, the Congo, Cote D'Ivoire, Croatia, Ecuador,
France, Gabon, Greece, Guinea, Iraq, Italy, Japan, Jersey, Kenya,
Lebanon, Mozambique, Nepal, Nigeria, Papua New Guinea, Peru, Russia,
Saudi Arabia, South Africa, Spain, Sierra Leone, Singapore, Tanzania,
Thailand, Turkey, Uganda, UK, USA, Venezuela, Vietnam.
8.2 Nothing in clause 8.1(A), (C) or (D) shall prevent or restrict any
member of the Sellers' Group from:
(A) carrying on or being engaged in or economically interested in
any of the following businesses:
1 remote site surveys;
2 surveillance detection services;
3 surveillance detection training;
27
4 training pertaining to law enforcement (excluding
driver training and further excluding lethal firearms
training other than holster training and less-lethal
firearms training);
5 security consultancy services in relation to data and
network security; or
(B) acquiring the whole or any part of a business which includes,
or the share capital of a company or group of companies whose
business or a part of whose business includes, operations the
carrying on of which would otherwise amount to a breach of the
undertaking contained in clause 8.1 (the "COMPETITIVE
OPERATIONS"), as part of a larger acquisition or series of
related acquisitions if the Competitive Operations comprise a
minor part of the business or the business of such company or
group of companies acquired (the "OVERALL OPERATIONS"). For
the purpose of this clause 8.2(B), a "MINOR PART" of the
Overall Operations shall be a part of the Overall Operations
the turnover or profit before tax of which does not, at the
time of the acquisition, exceed 10 per cent. of the gross
turnover or profit before tax of the Overall Operations as a
whole.
8.3 Armor undertakes to the Buyer for itself and on behalf of the UK Buyer
and the US Buyer that if Armor or any other member of the Sellers'
Group completes the acquisition of Competitive Operations as detailed
in clause 8.2(B) above:
(A) Armor will promptly inform the Buyer (and, if so requested by
the Buyer, provide the Buyer with such information as the
Buyer may reasonably require for the purposes of enabling the
Buyer to verify that the Competitive Operations in question
constitute a minor part of the Overall Operations) and further
that it will, or will procure that the relevant member of the
Sellers' Group will, use its reasonable endeavours to sell or
otherwise dispose of the Competitive Operations to a third
party or to the Buyer or any member of the Buyer's Group as
soon after such acquisition as is commercially practicable and
Armor will or will procure that the relevant member of the
Seller's Group will permit the Buyer or any member of the
Buyer's Group to participate in any sale process relating to
the disposal of the Competitive Operations as a potential
purchaser thereof on a basis no less preferential to any other
potential purchaser; and
(B) where the acquisition of Competitive Operations as detailed in
clause 8.2(B) above is made prior to the expiry of two years
from Completion, Armor will, for a period of two years from
Completion, ensure that the turnover or profit before tax of
the Competitive Operations does not increase to an extent such
that the turnover or profit before tax of the Competitive
Operations exceeds five per cent. of the gross turnover or
profit before tax of the Seller's Group as a whole and further
that it will, if so requested by the Buyer, provide the Buyer
with such information as the Buyer may reasonably require for
the purposes of enabling the Buyer to verify that the turnover
or profit before tax of the Competitive Operations in question
exceeds five per cent. of the gross turnover or profit before
tax of the Seller's Group as a whole
provided that nothing in this clause 8.3 will require Armor to sell or
otherwise dispose of, or to procure the sale or other disposal of, the
Competitive Operations on less than commercially reasonable terms.
8.4 Armor agrees that the undertakings contained in this clause 8 are fair
and reasonable and are necessary to ensure to the Buyer the full
benefit of the Group and are entered into for the purpose of protecting
the goodwill of the business of each member of the Group. In the event
that any such restriction shall be found to be void or unenforceable
but would be valid or effective if some part or parts thereof were
deleted, such restriction shall apply with such deletion as may be
necessary to make it valid and effective.
28
8.5 Armor agrees and undertakes to the Buyer for itself and on behalf of
the UK Buyer and the US Buyer that it will in no way seek to use,
register or otherwise exploit the trademarks the subject of the Trade
Mark Assignment and the Non-US Trade Mark Assignment.
9. CONFIDENTIAL INFORMATION
9.1 Armor shall not and shall procure that no other member of the Sellers'
Group shall use or disclose to any person any information relating to
the business or financial or other affairs of any member of the Group
which is of a secret or confidential nature ("ARMORGROUP CONFIDENTIAL
INFORMATION") Provided that clause 9.1 shall not apply to:
(A) use or disclosure of ArmorGroup Confidential Information to or
at the written request of the Buyer;
(B) disclosure of ArmorGroup Confidential Information required to
be disclosed by law, rule regulation or legal process or by a
recognised securities exchange or any other regulatory or
governing body;
(C) disclosure of ArmorGroup Confidential Information on a
confidential basis to professional advisers for the purpose of
advising the Seller;
(D) ArmorGroup Confidential Information which becomes generally
known other than by Armor's breach of this clause 9.1; or
(E) ArmorGroup Confidential Information that may be required in
order to enforce, through the institution of legal
proceedings, the Sellers' rights under this agreement or any
agreement delivered in connection with the transactions
contemplated hereby.
9.2 The Buyer shall not and shall procure that no other member of the
Buyer's Group shall use or disclose to any person any information
relating to the business or financial or other affairs of any member of
the Sellers' Group which is of a secret or confidential nature ("ARMOR
CONFIDENTIAL INFORMATION") Provided that clause 9.2 shall not apply to:
(A) use or disclosure of Armor Confidential Information to or at
the written request of the Armor;
(B) disclosure of Armor Confidential Information required to be
disclosed by law, rule regulation or legal process or by a
recognised securities exchange or any other regulatory or
governing body;
(C) disclosure of Armor Confidential Information on a confidential
basis to professional advisers for the purpose of advising the
Buyer;
(D) Armor Confidential Information which becomes generally known
other than by the Buyer's breach of this clause 9.2; or
(E) Armor Confidential Information that may be required in order
to enforce, through the institution of legal proceedings, the
Buyer's rights under this agreement or any agreement delivered
in connection with the transactions contemplated hereby.
9.3 The restrictions in this clause 9 shall apply without limit in time.
29
10. TAX AFFAIRS
10.1 The Buyer shall procure that after Completion the Sellers' Group and
its duly authorised agents are afforded all such access (including, at
their own expense, the right to take copies) to the books, accounts,
records and Tax returns of each Group Company and all such other
information and assistance as may reasonably be required to enable the
Sellers and their agents to prepare any Tax returns, computations,
notices, claims or elections on behalf of any member of Sellers' Group.
10.2 Armor shall likewise procure that the Buyer and its duly authorised
representatives are provided with access (including, at their own
expense, the right to take copies) to the books and records and Tax
returns of the Sellers' Group and such other information and assistance
as may be reasonably required for the preparation of any Tax returns,
computations, notices, claims or elections on behalf of any members of
the Buyer's Group.
11. ANNOUNCEMENTS
11.1 No party shall disclose the making of this agreement nor its terms nor
any other agreement entered into pursuant to this agreement (except
those matters set out in the press release in the agreed form) and each
party shall procure that each of its Related Persons shall not make any
such disclosure without the prior consent of the other party unless
disclosure is:
(A) to its professional advisers for the purposes of taking advice
in connection with this agreement and/or its legal
obligations; or
(B) required by law, rules or regulations or the rules or
requirements of any recognised securities exchange or any
other regulatory or governing body and disclosure shall then
only be made by that party:
1 after it has taken all such steps as may be
reasonable in the circumstances to agree the contents
of such announcement with the other party before
making such announcement and provided that (to the
extent practicable) any such announcement shall be
made only after notice to the other party/parties;
and
2 to the person or persons and in the manner required
by law, rules or regulation or by the relevant
recognised securities exchange or such other
regulatory body or as otherwise agreed between the
parties; or
(C) to its financiers, but only for the purpose of bona fide
compliance with reporting obligations imposed under the terms
of the financing documentation.
11.2 The restrictions contained in clause 11.1 shall apply without limit of
time.
12. ASSIGNMENT
12.1 Subject to clause 12.2, this agreement is personal to the parties and
accordingly no party without the prior written consent of the other
shall assign, transfer or declare a trust of the benefit of all or any
of any other party's obligations nor any benefit arising under this
agreement.
12.2 Notwithstanding clause 12.1, following Completion:
(A) each of the Buyer, the UK Buyer and the US Buyer shall be
entitled to charge and/or assign the benefit of its rights
under this agreement (the "RIGHTS") (in each case by way of
security) to a bank or financial institution that provides
facilities to it or any
30
Group Company itself or act, as facility agent and security
trustee or security agent by way of security for the
indebtedness incurred in connection with the acquisition of
the Shares (or in replacement in whole or part of any such
facilities) whether with or without other facilities (provided
always that the Buyer, the UK Buyer and the US Buyer, as
applicable, shall procure that the Rights may not be further
charged or assigned by such a security assignee to any third
party except pursuant to clause 12.3); and
(B) any Rights of the Buyer, the UK Buyer and the US Buyer may be
assigned to any member for the time being of the Buyer's Group
(but on the basis that any such assignee may only enforce and
enjoy the Rights so assigned to it while it remains a member
of the Buyer's Group) and any Rights so assigned to a member
of the Buyer's Group may be assigned by that member of the
Buyer's Group to another member of the Buyer's Group for the
time being on an equivalent basis.
12.3 The person to whom Rights have been charged or assigned in accordance
with clause 12.2 or any administrative receiver appointed by it or
other person appointed to enforce any such security may charge or
assign all or any of the Rights to any third party for the purpose of
or in connection with such enforcement.
12.4 Any permitted assignee of the Buyer, the UK Buyer and the US Buyer or
of another permitted assignee and the UK Buyer and the US Buyer may
enforce any right or benefit assigned to it as if it had been named in
this agreement as Buyer and may recover thereunder as if it had
acquired the Shares or other relevant Assets for the consideration and
upon the other terms of this agreement and has thereby sustained all
diminutions of value and losses and expenses and consequences of such
acquisition as have been sustained by the Buyer, the UK Buyer or the US
Buyer, as applicable, and any subsequent holder for the time being of
any such Shares and/or Assets, including itself, as if they were all
one entity which had retained the ownership of such Shares and Assets
throughout Provided that the assignee shall not be entitled to recover
from Armor any more than the Buyer, the UK Buyer or the US Buyer, as
applicable, would have been able to recover were the assignment not to
have been made.
13. COSTS
13.1 Unless expressly otherwise provided in this agreement each of the
parties shall bear its own legal, accountancy and other costs, charges
and expenses connected with the sale and purchase of the Shares.
13.2 The Sellers undertake that none of the members of the Group have borne
any costs and expenses in connection with the sale or, so far as Armor
is aware, purchase of the Shares and other assets hereunder and to the
extent that they have the Sellers will procure that the same are
reimbursed to the relevant members of the Group without any rights of
recourse against the Buyer's Group on the part of the person
reimbursing the same.
14. EFFECT OF COMPLETION
The terms of this agreement (insofar as not performed at Completion and
subject as specifically otherwise provided in this agreement) shall
continue in force after and notwithstanding Completion.
15. FURTHER ASSURANCES
15.1 Each of the parties shall from time to time upon reasonable request
from the other do or procure the doing of all acts and/or execute or
procure the execution of all such documents in so far as each is
reasonably able and in a form reasonably satisfactory to the party
concerned
31
for the purpose of transferring to the Buyer (or the UK Buyer, the US
Buyer or as the Buyer may otherwise direct) the Shares and other Assets
acquired pursuant to this agreement and otherwise giving the other
parties the full benefit of this agreement.
15.2 Without prejudice to clause 15.1, if it is discovered that any
Intellectual Property or other rights or assets currently exclusively
used in the business of the Group or of any Group member are vested in
or owned by any member of the Sellers' Group, Armor shall procure that
the same are duly transferred to and vested in the Buyer or such member
or members of the Group as it may direct in writing for no additional
consideration.
15.3 The Buyer hereby acknowledges that it is not buying any interest in the
shares or other securities of any of the Excluded Subsidiaries or USDS
Inc or New Technologies Armor Inc. pursuant to this agreement and to
the extent that any interest in the title to such shares or securities
becomes vested in the Buyer, the Buyer shall as soon as reasonably
practicable following request from Armor at Armor's expense do or
procure the doing of all acts and/or execute or procure the execution
of all such documents in a form reasonably satisfactory to Armor for
the purpose of vesting such title in Armor or any other member of the
Sellers' Group as Armor shall direct.
15.4 The parties acknowledge that prior to the entry into of this agreement
it has not been possible, due to the requirements of third parties, for
Armor (or the relevant Seller) to obtain releases of the security
specified in schedule 13 (the "RELEVANT SECURITY") which affects the
Group and that, consequently, it will be necessary to effect such
releases and relevant filings in connection therewith after Completion.
Armor will (at its sole cost and expense) use all reasonable endeavours
to obtain releases of the Relevant Security and effect such filings as
soon as reasonably practicable following Completion and in terms
reasonably satisfactory to the Buyer.
15.5 The Buyer agrees that it shall procure that the current financial year
end of any member of the Group will not change from 31 December for
tax, accounting or statutory purposes.
16. ENTIRE AGREEMENT
16.1 Each party on behalf of itself and as agent for each of its Related
Persons acknowledges and agrees with the other parties (each such party
acting on behalf of itself and as agent for each of its Related
Persons) that:
(A) this agreement together with any other documents referred to
in this agreement (together the "TRANSACTION DOCUMENTS")
constitute the entire and only agreement between the parties
and their respective Related Persons relating to the subject
matter of the Transaction Documents;
(B) neither it nor any of its Related Persons have been induced to
enter into any Transaction Document in reliance upon, nor have
they been given, any warranty, representation, statement,
assurance, covenant, agreement, undertaking, indemnity or
commitment of any nature whatsoever other than as are
expressly set out in the Transaction Documents and, to the
extent that any of them have been, it (acting on behalf of
itself and as agent on behalf of each of its Related Persons)
unconditionally and irrevocably waives any claims, rights or
remedies which any of them might otherwise have had in
relation thereto; and
(C) neither it (nor its Related Persons, where appropriate) have
any right to rescind or terminate any Transaction Documents
either for breach of contract or for negligent or innocent
misrepresentation or otherwise;
32
PROVIDED THAT the provisions of this clause 16 shall not exclude any
liability which any of the parties or, where appropriate, their Related
Persons would otherwise have to any other party or, where appropriate,
to any other party's Related Persons or any right which any of them may
have to rescind this agreement in respect of any statements made
fraudulently by any of them prior to the execution of this agreement or
any rights which any of them may have in respect of fraudulent
concealment by any of them.
17. VARIATIONS AND THIRD PARTY RIGHTS
17.1 This agreement may be varied only by a document signed by all the
parties to this agreement.
17.2 The provisions of The Contracts (Rights of Third Parties) Act 1999
shall not apply to this agreement save to the extent that rights are
expressly granted hereunder to the UK Buyer, the US Buyer and/or
Granville Baird Capital Partners Limited but this clause 17.2 shall not
affect any right or remedy of a third party which exists or is
available otherwise than by operation of that Act.
18. WAIVER/CONSENTS
18.1 A waiver of any term, provision or condition of, or consent granted
under, this agreement shall be effective only if given in writing and
signed by the waiving or consenting party and then only in the instance
and for the purpose for which it is given.
18.2 No failure or delay on the part of any party in exercising any right,
power or privilege under this agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.
18.3 No breach of any provision of this agreement shall be waived or
discharged except with the express written consent of the parties to
this agreement.
18.4 The obligations and liabilities of any party hereto shall not be
prejudiced released or effected by any time or forbearance or
indulgence release or compromise given or granted by any person to whom
such obligations and liabilities are owed or by any other person to
such party or any other parties so obliged or liable nor by any other
matter or circumstance which (but for this provision) would operate to
prejudice release or effect any such obligations, except in any such
case an express written release by all the parties to whom the relevant
obligations and liabilities are owed and due.
18.5 The written consent or waiver of Armor shall operate due consent or
waiver, as appropriate, on behalf of all of the Sellers for the
purposes of this agreement, the Tax Deed and any other agreement
entered into pursuant hereto.
19. INVALIDITY
19.1 If any provision of this agreement is or becomes invalid, illegal or
unenforceable in any respect under the law of any jurisdiction:
(A) the validity, legality and enforceability under the law of
that jurisdiction of any other provision; and
(B) the validity, legality and enforceability under the law of any
other jurisdiction of that or any other provision,
shall not be affected or impaired in any way.
33
20. NO SET-OFF
20.1 The Buyer shall not have the right to set-off any amount due by it, or
due to be procured to be paid by it, under any provision of this
agreement against any amount due by Armor or any other of the Sellers
to it (or, for the avoidance of doubt to either the UK Buyer or the US
Buyer) under this agreement.
20.2 Notwithstanding the foregoing, the Buyer shall be entitled to withhold
$65,714.50 from the monies otherwise due to be procured by it to be
paid by Armor Holdings Limited on 25 November 2004 (pursuant to the
provisions of clause 3.5(A)2) on the basis that were this agreement to
have been signed prior to settlement of the claim made by Terence
Bramble of his claim against the Group (which was settled on or about
20 November 2003), it would have included in clause 6.1 a further
indemnity in respect of such claim (along the lines of the indemnity
included at clause 6.1(D)) and accordingly Armor would have been liable
to pay $65,714.50 to the US Buyer under such indemnity. Armor agrees to
account for such set-off as repayment by Armor Holdings Limited of
$65,714.50 of the debt otherwise due by Armor Holdings Limited to Armor
and a payment by Armor of an equivalent amount to the US Buyer, and the
Buyer shall procure that Armor Holdings Limited accounts to the US
Buyer for the same.
21. NOTICES
21.1 Any notice, demand or other communication given or made under or in
connection with the matters contemplated by this agreement shall be in
writing and shall be delivered personally or sent by fax or prepaid
first class post or (if sent abroad) air mail:
In the case of the Buyer to:
ArmorGroup International Limited,
Eggington House,
25-28 Buckingham Gate
London SW1E 6LD
Fax: +44 (0)20 7828 2845
Attention: Dave Seaton/Christopher Beese
with a copy to:
Granville Baird Capital Partners Limited
5th Floor
Walsingham House
35 Seething Lane
London EC3N 4AH
Fax: +44 (0)20 7667 8481
Attention: Simon Havers/Mike Fell
In the case of the Sellers to:
Armor Holdings, Inc.,
1400 Marsh Landing Parkway
Suite 112
Jacksonville
Florida 32250
Fax: +1 904 741 5403
Attention: Robert Schiller
34
with copy to:
Kane Kessler P.C.
1350 Avenue of the Americas
26th Floor
New York,
New York 10019
Fax: +1 212 245 3009
Attention: Robert L. Lawrence
and shall be deemed to have been duly given or made as follows:
(A) if personally delivered, upon delivery at the address of the
relevant party;
(B) if sent by first class post, two Business Days after the date
of posting;
(C) if sent by air mail, five Business Days after the date of
posting; and
(D) if sent by fax, when despatched with confirmation of delivery;
provided that if, in accordance with the above provisions, any such
notice, demand or other communication would otherwise be deemed to be
given or made outside 9.00 a.m. - 5.00 p.m. on a Business Day such
notice, demand or other communication shall be deemed to be given or
made at 9.00 a.m. on the next Business Day.
21.2 A party may notify the other party to this agreement of a change to its
name, relevant addressee, address or fax number for the purposes of
clause 21.1 provided that such notification shall only be effective:
(A) on the date specified in the notification as the date on which
the change is to take place; or
(B) if no date is specified or the date specified is less than
five Business Days after the date on which notice is given,
the date falling five Business Days after notice of any such
change has been given.
22. COUNTERPARTS
This agreement may be executed in any number of counterparts which
together shall constitute one agreement. Any party may enter into this
agreement by executing a counterpart and this agreement shall not take
effect until it has been executed by all parties.
23. COMPLIANCE OBLIGATION
Armor undertakes to the Buyer for itself and on behalf of the UK Buyer
and the US Buyer that Armor will procure compliance by each of the
Sellers with their respective obligations under this agreement.
24. GOVERNING LAW AND JURISDICTION
24.1 This agreement (and any dispute, controversy, proceedings or claim of
whatever nature arising out of or in any way relating to this agreement
or its formation) shall be governed by and construed in accordance with
English law.
24.2 The parties irrevocably agree that the Courts of England are to have
non-exclusive jurisdiction to settle any dispute which may arise out of
or in connection with this agreement
35
and the documents to be entered into pursuant to it. Each of the
parties irrevocably submits to the jurisdiction of such courts and
waives any objection to proceedings in any such court on the ground of
venue or on the ground that proceedings have been brought in an
inconvenient forum.
24.3 Each party irrevocably agrees that a final and non-appealable judgment
of a court of competent jurisdiction in connection with a dispute over
this agreement and/or any documents to be entered into pursuant to it
shall be conclusive and binding upon it and may be enforced against it
in the courts of any other jurisdiction.
IN WITNESS whereof this agreement has been executed by each of the parties on
the date first above written.
36
SIGNED for and on behalf of ) /s/ Warren B Kanders
ARMOR HOLDINGS INC. ) Warren B Kanders
Chief Executive Officer
SIGNED for on behalf of )
ARMOR GROUP LIMITED )
PARTNERSHIP )
acting through its general partner ) /s/ Todd Smith
ARMOR HOLDINGS GP, LLC ) Todd Smith
Manager
SIGNED for and on behalf of )
ARMOR HOLDINGS MOBILE ) /s/ Todd Smith
SECURITY LLC ) Todd Smith
Secretary
SIGNED for and on behalf of ) /s/ Todd Smith
ARMOR GROUP SERVICES LLC ) Todd Smith
Manager
SIGNED for and on behalf of )
ARMORGROUP INTERNATIONAL ) /s/ David Seaton
LIMITED ) David Seaton