DATED 26 NOVEMBER 2003
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(1) ARMOR HOLDINGS INC.
(2) ARMORGROUP INTERNATIONAL INC.
(3) ARMORGROUP (UK) LIMITED
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TAX DEED
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TABLE OF CONTENTS
PAGE
1. INTERPRETATION....................................................1
2. INDEMNITY.........................................................3
3. TIMING............................................................6
4. RIGHT TO REIMBURSEMENTS AND CREDITS...............................6
5. REFUNDS...........................................................7
6. RESISTANCE OF CLAIMS..............................................7
7. TAX RETURNS.......................................................8
8. COUNTER INDEMNITY.................................................8
9. GROSS UP.........................................................10
10. MISCELLANEOUS....................................................10
Schedule.........................................................12
-i-
DATED 26 November 2003
PARTIES
(1) ARMOR HOLDINGS INC. a corporation incorporated under the laws of the
State of Delaware whose principal office is at 1400 Marsh Landing
Parkway, Suite 112, Jacksonville, FL 32250 U.S.A. (the "COVENANTOR");
(2) ARMORGROUP INTERNATIONAL INC. a corporation organised under the laws of
the State of Delaware, USA with Tax ID Number (EIN) 43-2034282 (the "US
BUYER" which expression shall include its successors and assigns) ; and
(3) ARMORGROUP (UK) LIMITED, a private limited company incorporated in
England and Wales with the company number 4969936 whose registered
office is at Brierly Place, New London Road, Chelmsford, Essex, CM2 0AP
(the "UK BUYER").
RECITAL
This deed is entered into pursuant to the provisions of an agreement (the "SALE
AGREEMENT") made on the date hereof pursuant to which the Buyer and its
affiliates have agreed to purchase all of the issued shares in the capital of
each of the companies details of which are set out in schedule 1 and 2 of the
Sale Agreement.
NOW THIS DEED WITNESSES AS FOLLOWS:
1. INTERPRETATION
1.1 Subject to clause 1.2 and unless the context otherwise indicates,
words, expressions and abbreviations defined in the Sale Agreement
shall have the same meanings in this deed and any provisions of the
Sale Agreement concerning matters of construction or interpretation
shall mutatis mutandis apply to this deed.
1.2 The following words, expressions and abbreviations used in this deed
shall, unless the context otherwise requires, have the following
meanings:
"ACTUAL TAX LIABILITY" means any liability of the Company to make an
actual payment of Tax or in respect of Tax (including in relation to a
group payment arrangement entered into in accordance with section 36 of
the Finance Act 1998), in which case the amount of the Actual Tax
Liability shall be the amount of the actual payment;
"BUYER'S RELIEF" means any Relief to the extent that the same arises in
respect of periods after the Completion Date;
"CLAIM FOR TAX" means:
(a) any claim, assessment, demand, notice, determination or other
document issued or action taken by or on behalf of any Tax
Authority or any other person by virtue of which the Company
is or may have a Tax Liability; and/or
(b) any self-assessment made by the Company in respect of any Tax
Liability which it considers that it is or may become liable
to pay;
"COMPANY" means each and all of the companies listed in schedules 1 and
2 of the Sale Agreement;
"COVENANTOR'S GROUP" has the meaning ascribed to the "Seller's Group"
in the Sale Agreement;
"DEEMED TAX LIABILITY" means:
(a) the utilisation or set-off of a Buyer's Relief available to
the Company against any Actual Tax Liability or against any
income, profits or gains where, but for such setting off, the
US Buyer would have been entitled to make a claim under this
deed, in which case the amount of the Deemed Tax Liability
shall be equal to the amount which would have been payable in
the absence of that Buyer's Relief; or
(b) any liability to make any payment for Group Relief to the
extent that the surrender of such Group Relief for no payment
has been reflected in the net assets of the Company as shown
by the Accounts, in which case the amount of the Deemed Tax
Liability shall be the amount of such liability;
"GROUP RELIEF" means any of the following:
(a) relief surrendered or claimed pursuant to Chapter IV Part X of
the Taxes Act 1988;
(b) advance corporation tax surrendered or claimed pursuant to
section 240 of the Taxes Act 1988;
(c) a tax refund relating to an accounting period as defined by
section 102(3) of the Finance Act 1989 in respect of which a
notice has been given pursuant to section 102(2) of the
Finance Act 1989;
or, in each case, any foreign equivalent
"INCOME, PROFITS OR GAINS" includes any other measure by reference to
which Tax is computed;
"RELEVANT EVENT" means every event, act, omission, or transaction done
or omitted to be done by the Covenantor or the Company or which in any
way concerns or affects the Company whether or not done or omitted to
be done by the Company or the Covenantor and including, for the
avoidance of doubt, Completion;
"RELIEF" means any allowance, credit, exemption, deduction, set-off or
relief from or in computing Tax or any right to the repayment of Tax;
"TAX AUTHORITY" means any taxing or other authority (whether within or
outside the United Kingdom) competent or authorised to impose any Tax;
"TAX LIABILITY" means either an Actual Tax Liability or a Deemed Tax
Liability;
"TAX RETURNS" means all computations and returns relating to Tax
matters (and correspondence and documentation relating thereto);
"TAXATION STATUTES" means all statutes, statutory instruments, decrees,
orders, enactments, laws, directives and regulations, whether domestic
or foreign, providing for or imposing any Tax;
"TAX" or "TAX" means any tax, and any duty, levy, impost or charge in
the nature of tax, whether domestic or foreign, and, except insofar as
the same is attributable to the
unreasonable delay or default of the Buyer's Group or the Company after
Completion, any penalty or interest connected therewith; and
"TAXES ACT 1988" means the Income and Corporation Taxes Act 1988
1.3 For the purposes of this deed, and in particular for determining to
what extent any liability for Tax arises in respect of or by reference
to any income, profits or gains earned, accrued or received on or
before Completion or otherwise relates to the period ending on the date
of Completion, the date of Completion shall be deemed to be an actual
accounting date of the Company for the purposes of section 12 of the
Taxes Act 1988 (or its equivalent in any other jurisdiction) and
without prejudice to the generality of the foregoing:
(A) any Relief which would on that basis arise after the date of
Completion shall be deemed for the purposes of this deed to be
a Relief which arises in respect of a period after Completion
or in respect of any Relevant Event occurring after
Completion;
(B) any income, profits or gains which would on that basis accrue
after the date of Completion shall be deemed for the purposes
of this deed to be income, profits or gains earned, accrued or
received after Completion;
(C) any Relief which would on that basis arise on or before the
date of Completion shall be deemed for the purposes of this
deed to be a Relief which arises in respect of a period on or
before Completion or in respect of any Relevant Event
occurring on or before Completion; and
(D) any income, profits or gains which would on that basis accrue
on or before the date of Completion shall be deemed for the
purposes of this deed to be income, profits or gains earned,
accrued or received on or before Completion;
2. INDEMNITY
2.1 Subject to clause 2.3, the Covenantor hereby covenants with the US
Buyer to pay from time to time to the US Buyer an amount equal to:
(A) any Actual Tax Liability of the Company which arises:
(1) as a consequence of a Relevant Event occurring or
having been entered into on or before Completion
(including as a consequence of the combined effect of
two or more Relevant Events one or more of which
shall have taken place in the ordinary course of the
Company's business before Completion); or
(2) in respect of any income, profits or gains earned,
accrued or received on or before Completion;
(B) any Deemed Tax Liability;
(C) any Actual Tax Liability (arising by reference to income,
profits or gains of the Company arising on or before
Completion) for which any Company becomes liable by virtue of
the relationship between that Company and the Covenantor or
any member of the Covenantor's Group at any time on or before
Completion and for which the Company becomes liable as a
result of the failure by the Covenantor or any member of the
Covenantor's Group to discharge the same;
(D) any Tax Liability which arises in relation to the
reorganisation described in schedule 8 of the Sale Agreement;
(E) any Tax Liability comprising a liability of the Company
arising on or before Completion to make any payment on account
of Tax (including any liability to make any prepayment,
deposit or like amount) due or payable under the Federal or
State laws of the United States of America;
(F) any Tax Liability which arises as a consequence of a Relevant
Event occurring or having been entered into on or before
Completion or in respect of any income, profits or gains
earned, accrued or received on or before Completion under
Russian law or regulations in relation to the technology use
agreement dated 27 November 2000 and entered into between (1)
Armor Group Limited Partnership and (2) OOO DSL Eurasia;
(G) any Tax Liability which arises as a result of the Seller
waiving (whether before, on or after Completion) any
Inter-Group Indebtedness; or
(H) any costs and expenses reasonably and properly incurred or
payable in connection with any Tax Liability which is the
subject of a successful claim under this deed.
2.2 The covenant contained in clause 2.1 shall not apply to any Tax
Liability to the extent that:
(A) it arises in the ordinary course of business of the Company
since the Accounts Date or as a result of acquiring and
disposing of capital assets since the Accounts Date (save as
part of the reorganisation described in schedule 8 of the Sale
Agreement);
(B) it has been paid on or before Completion or that specific,
identified provision or reserve for the liability to which the
same relates has been made in the Accounts;
(C) it shall have arisen in consequence of any act, omission or
transaction of the Company and/or the Buyer's Group after
Completion otherwise than in the ordinary course of the
business of the Company or in accordance with any contractual
arrangement entered into by the Company prior to Completion
and which in all cases, any member of the Buyer's Group knew,
or ought to have known would give rise to the relevant Tax
Liability;
(D) it arises as a result of or by reference to income, profits or
gains actually earned or received by the Company on or before
the Accounts Date and not reflected in the Accounts but
provided that such income, profits, or gains not reflected in
the accounts is realised in the Company at or after Completion
in cash or assets readily convertible into cash; (E) it would
not have arisen or is increased as a result of any failure by
the Company or the UK Buyer or the US Buyer to comply with its
obligations under this deed;
(F) it would not have arisen but for the passing of or any change
in, after the date of Completion, any law, regulation,
published interpretation of the law or published
administrative practice of any government, governmental
department, agency or regulatory body or an increase in the
rate of Tax or any imposition of Tax not actually or
prospectively in force at the date of the Sale Agreement or
any withdrawal of any published extra-statutory concession
after such date;
(G) it would not have arisen but for:
(1) any claim, election, surrender or disclaimer made, or
notice or consent given, or any other thing done
after the date of Completion (other than one the
making, giving or doing of which was taken into
account in computing any
provision or reserve for Tax in the Accounts) under
or in connection with the provisions of any Tax
statutes by the Company or any member of the Buyer's
Group; or
(2) the failure or omission by the Company to make any
claim, election, surrender or disclaimer, or give any
notice or consent or do any other thing the making,
giving or doing of which was taken into account in
computing any provision or reserve for Tax in the
Accounts and full details of which were notified to
the UK Buyer or the US Buyer in writing at least 10
Business Days before the expiry of any time limit for
making such claim, election, surrender or disclaimer;
(H) it would not have arisen but for some act, omission,
transaction or arrangement carried out at the written request
or with the written approval of the UK Buyer or US Buyer in
either case prior to Completion or which was expressly
authorised in writing by the Sale Agreement (save that nothing
in this clause 2.2(H) shall exclude clause 2.1 applying to any
Tax Liability arising in relation to the reorganisation
described in schedule 8 of the Sale Agreement);
(I) any Relief (other than a Buyer's Relief but including the
surrender to the Company of any Reliefs or losses by the
Covenantor or any member of the Covenantor's Group at no cost
to the Company where such surrender was not assumed or
provided for in the preparation of the Accounts) is available
to the Company to set against or otherwise mitigate the Tax
Liability in question or would be available on the making of
an appropriate claim provided that this clause 2.2(I) shall
not apply in respect of claims made under clause 2.1(G) of
this deed up to a limit of $500,000 less any amounts
consisting of a Deemed Tax Liability which relate to the
utilisation or set-off of a Buyers Relief against any Actual
Tax Liability or against any income, profits or gains where,
but for such setting off, the US Buyer would have been
entitled to make a claim under clause 2.1(G);
(J) it would not have arisen but for a cessation of or any change
in the nature or conduct of any trade carried on by the
Company being a cessation or change occurring on or after
Completion;
(K) it arises as a result of any change after Completion in any
accounting policy (including the length of any accounting
period for Tax purposes), any Tax or accounting basis or
practice of the Company save where such change was required to
comply with generally accepted accounting principles;
(L) it arises as a result of the Company ceasing on or after
Completion to be eligible either for the corporation tax
starting rate or the small companies rate of Tax (as the case
may be) or the equivalent in any jurisdiction;
(M) an amount in respect of such Tax Liability has been recovered
under the Warranties or otherwise under the Sale Agreement or
this deed (or in either case would have been so recovered but
for a threshold or de minimis provision limiting liability) or
the Covenantor's Group has made payment in respect of such Tax
Liability pursuant to sections 767A and 767AA of the Taxes Act
1988 or any other provision in the United Kingdom or elsewhere
imposing liability on the Covenantor or any member of the
Covenantor's Group for Tax primarily chargeable against the
Company;
(N) the liability of the Covenantor in respect thereof is limited
or restricted pursuant to the provisions of schedule 4
(Seller's Protection) to the Sale Agreement;
(O) it is a liability arising in relation to the payment of
bonuses (whether by way of release from an obligation to pay
any debt or otherwise) as contemplated in the Schedule to this
deed and in the amounts listed in the column of that Schedule
headed "Total Cash Received"; or
(P) it is a liability arising on the grant or exercise or
otherwise in relation to or arising in respect of any options
granted under the Armor Holdings Inc. 1999 Stock Incentive
Plan and the Armor Holdings Inc. 2002 Stock Incentive Plan.
2.3 Any payment made under this deed between the parties (including in
particular any payments made pursuant to clause 2.1 hereof by the
Covenantor to the US Buyer) shall be treated so far as possible as an
adjustment to the consideration paid by the US Buyer or its affiliates
under the Sale Agreement for the shares of the Company in question.
3. TIMING
Where the Covenantor becomes liable to make any payment pursuant to
clause 2, the due date for the making of that payment shall be the
later of seven days after the date of demand therefor and:
(A) insofar as the claim relates to an Actual Tax Liability but
subject to clause 3(E) of this deed, three business days
before the last day on which a payment of that Tax may be made
by the Company without incurring any liability to interest
and/or penalties;
(B) insofar as the claim arises in respect of a Deemed Tax
Liability which relates to the utilisation or set-off of a
Buyer's Relief against any Actual Tax Liability but subject to
clause 3(E) of this deed, three business days before the last
date on which the Company would, but for such utilisation or
set-off have been liable to pay such Actual Tax Liability to
avoid any charge to interest/penalties;
(C) insofar as the claim arises in respect of a Deemed Tax
Liability which relates to any liability of the Company to
make any payment for Group Relief, three business days before
the day on which the Company is liable to pay such amount;
(D) insofar as the claim arises pursuant to clause 2.1(H), the day
on which the costs and expenses fall due for payment; and
(E) insofar as the claim arises in respect of the first $500,000
of either (1) claims made under clause 2.1(G) of this deed or
(2) claims consisting of a Deemed Tax Liability which relate
to the utilisation or set-off of a Buyer's Relief against any
Actual Tax Liability or against any income, profits or gains
where, but for such utilisation or setting off, the US Buyer
would have been entitled to make a claim under clause 2.1(G)
(the "RELEVANT CLAIMS") and to the extent there is a Relief
available or a Relief would be available on the making of an
appropriate claim (no matter in which Group Company and
including by way of group relief and carry back of losses and
including any Buyer's Relief which has been utilised or
set-off in establishing the Relevant Claim) to reduce or
extinguish such liability arising or to set-off against
income, profits or gains, the Relevant Claims shall fall due
for payment three business days before the last day on which
the Company becomes (and to the extent only that it becomes)
after the date hereof liable to make an actual payment of Tax
(or a payment on account of Tax) to avoid incurring any
liability to interest and/ or penalties.
4. RIGHT TO REIMBURSEMENTS AND CREDITS
4.1 If any member of the Buyer's Group or the Company is or becomes
entitled to recover from some other person any amount as a result of or
by reference to any Tax Liability which is likely to result or has
resulted in a payment by the Covenantor to the US Buyer under this
deed, then the UK Buyer or the US Buyer shall promptly notify the
Covenantor of the said entitlement and, if so required by the
Covenantor and if the Covenantor undertakes to pay and provides
satisfactory security for all reasonable costs and expenses properly
incurred by the UK Buyer or the US Buyer and the Company, shall and
shall procure that the Company shall enforce that recovery (keeping the
Covenantor fully informed of progress) and shall apply the same in
accordance with clause 4.2.
4.2 If any member of the Buyer's Group or the Company receives a recovery
as mentioned in clause 4.1 or a Relief as a result of a Tax Liability
which gives rise to a claim by the US Buyer under the terms of this
deed then (and subject to the prior payment of the relevant costs and
expenses by the Covenantor):
(A) where the Covenantor has previously paid any amount in respect
of such Tax Liability under this deed, the US Buyer shall
promptly pay to the Covenantor an amount equal to so much of
the recovery or Relief received (less any Tax paid by the
recipient in respect thereof) as does not exceed the amount
which the Covenantor has previously paid under this deed
(together with so much of any interest or repayment supplement
paid to the recipient of the recovery or Relief or benefit in
respect thereof as corresponds to the proportion of the
recovery or Relief or benefit accounted for under this
clause); and
(B) where the Covenantor has not yet paid any amount in respect of
such Tax Liability, the amount of such recovery, Relief (less
any Tax paid by the recipient in respect thereof, but together
with any interest or repayment supplement received) shall be
offset against any subsequent payment which the Covenantor
would otherwise have been liable to make.
4.3 To the extent the sum recovered or Relief received (less any Tax paid
by the recipient in respect thereof, but together with any interest or
repayment supplement received) exceeds the amount which the Covenantor
has previously paid under this deed or the amount of any subsequent
payment which would otherwise have been made in respect of that Tax
Liability, then such excess shall be carried forward and set off
against any future claims made against the Covenantor under this deed.
5. REFUNDS
5.1 The UK Buyer or the US Buyer shall promptly notify the Covenantor of
any repayment or right to repayment of Tax which the Company is or
becomes entitled to or receives in respect of a Relevant Event
occurring or period prior to Completion, where or to the extent that
such right or repayment was not included in the Accounts as an asset (a
"REFUND").
5.2 Any Refund obtained (less any reasonable costs of obtaining it) shall
be promptly paid by the US Buyer or the UK Buyer to the Covenantor
where the amount of such Refund exceeds $10,000.
6. RESISTANCE OF CLAIMS
6.1 If the Buyer's Group or the Company becomes aware of any Claim for Tax
which may result in the US Buyer having a claim against the Covenantor
under this deed (or which would so result in any such case but for the
provisions of paragraphs 2 or 3 of schedule 4 to the Sale
Agreement), the UK Buyer or the US Buyer shall give notice to the
Covenantor in the manner provided by the Sale Agreement as soon as is
reasonably practicable and in any event at least 21 days prior to the
expiry of any time limit in which an appeal against the Claim for Tax
has to be made.
6.2 The UK Buyer and the US Buyer shall, and shall procure that the Company
shall keep the Covenantor informed of all material matters pertaining
to the dispute, including providing the Covenantor with copies of all
written communications pertaining to the dispute and acting in good
faith take such action and give such information and assistance in
connection with the affairs of the Company as the Covenantor may
reasonably request by written notice for the purpose of avoiding,
resisting, appealing, or compromising a Claim for Tax or paying an
amount in respect of the Tax Liability provided that the UK Buyer, the
US Buyer and the Company shall not be obliged to comply with any
request of the Covenantor which involves contesting any assessment for
tax before any tribunal, court or other appellate body unless they have
been advised in writing by leading Tax counsel instructed by agreement
between the UK Buyer, the US Buyer and the Covenantor at the expense of
the Covenantor that an appeal against the assessment will, on the
balance of probabilities, be successful.
6.3 Nothing in this clause 6 shall oblige any member of the Buyer's Group
to supply any information or assistance to the extent such is
prohibited by law or to do or refrain from doing anything which is
unlawful.
6.4 The UK Buyer and the US Buyer shall procure that the Claim for Tax is
not settled or otherwise compromised without the Covenantor's prior
written consent, such consent not to be unreasonably withheld or
delayed.
6.5 The action which the Covenantor may request under clause 6.2 shall
include (without limitation but subject to the provisions of the clause
6.2) the Company applying to postpone (so far as legally possible ) the
payment of any Tax but shall not include allowing the Covenantor to
take on or take over the conduct of any proceedings arising in
connection with the Claim for Tax in question.
7. TAX RETURNS
7.1 The UK Buyer and the US Buyer or their duly authorised agents shall be
responsible for and have the conduct of preparing, submitting and
agreeing the Tax Returns for all accounting periods commencing before
Completion takes place provided that each such Tax Return is submitted
in draft form to the Covenantor or its duly authorised agent for
comment at least 40 Business Days before the same is due to be sent to
the relevant Tax Authority. The Covenantor or its agent shall comment
within 20 Business Days of such submission and if the UK Buyer or the
US Buyer has not received comments within that period, the Covenantor
or its agents shall be deemed to have approved such draft computations
and documentation. If the Covenantor or its agents have any comments or
suggestions, the UK Buyer or the US Buyer or their agents shall not
unreasonably refuse to adopt such comments or suggestions provided
always that nothing herein shall oblige the UK Buyer or the US Buyer to
submit any computation or other document unless the UK Buyer or the US
Buyer acting reasonably is satisfied that the same is accurate and
complete in all material respects. The Covenantor and the UK Buyer and
the US Buyer shall respectively afford (or procure to be afforded) to
the other or its duly authorised agents such information and assistance
as may reasonably be required to prepare, submit and agree such Tax
Return.
7.2 The UK Buyer and the US Buyer shall procure that no Claim for Tax, Tax
Liability, action or issue in respect of which the Covenantor could be
required to make a payment under this deed is settled or otherwise
compromised without the Covenantor's prior written consent, such
consent not to be unreasonably withheld, and the UK Buyer and the US
Buyer shall procure
that the Company and its advisers do not submit any correspondence or
return or send any other document to any Tax Authority in circumstances
where the UK Buyer or the US Buyer or any such person is aware or could
reasonably be expected to be aware that the effect of submitting such
correspondence or return or sending such document would or could be to
put such Tax Authority on notice of any matter which could give rise
to, or could increase, a claim under this deed without first affording
the Covenantor a reasonable opportunity to comment thereon and without
taking account of such comments so far as it is reasonable to do so.
7.3 Nothing in this clause 7 shall oblige any member of the Buyer's Group
to supply any information or assistance to the extent such is
prohibited by law or to do or refrain from doing anything which is
unlawful.
7.4 The costs of preparation, submission and agreement of the Tax Returns
referred to in this clause 7.1 shall be borne as follows:
(A) as to the Tax Returns for all accounting periods ended on or
before 31 December 2001, by the Covenantor but only to the
extent such costs are reasonable; and
(B) as to all other Tax Returns by the Company.
8. COUNTER INDEMNITY
8.1 The US Buyer hereby covenants with the Covenantor to pay to the
Covenantor by way of adjustment to the consideration for the sale of
the Shares, an amount equal to any of the following:
(A) any liability for Tax for which the Covenantor or any other
person falling within section 767A(2) or 767AA(4) of the Taxes
Act 1988 becomes liable by virtue of the operation of sections
767A, 767AA and 767B of the Taxes Act 1988 in circumstances
where the taxpayer company (as referred to in section 767A(1))
and/or the transferred company (as referred to in section
767AA(1)) is the Company;
(B) any liability for Tax (arising by reference to income, profits
or gains of the Company arising after Completion) for which
any member of the Covenantor's Group becomes liable by virtue
of the relationship between that member of the Covenantor's
Group and the Company at any time on or before Completion;
(C) any liability or increased liability to Tax of any member of
the Covenantor's Group which arises as a consequence of or by
reference to any of the following occurring or being deemed to
occur after Completion:
(1) the disposal by the Company of any asset or of any
interest in or right over any asset;
(2) the Company ceasing to be resident in the United
Kingdom for the purposes of any Tax;
(3) the effecting by the Company of any such payment or
transfer of assets as constitutes the receipt by
another person of an abnormal amount by way of
dividend (as defined in section 709 of the Taxes Act
1988);
(D) any liability or increased liability to Tax of the Covenantor
or any member of the Covenantor's Group which arises as a
result of or by reference to any reduction or disallowance of
Group Relief that would otherwise have been available to the
Covenantor or the relevant member of the Covenantor's Group
where and to the extent that such reduction or disallowance
occurs as a result of:
(1) any total or partial withdrawal effected by the
Company after Completion of any surrender of Group
Relief that was submitted by the Company to the
Inland Revenue or other Tax Authority on or before
Completion in respect of any accounting period ended
on or before Completion; or
(2) any total or partial disclaimer made by the Company
after Completion of any capital allowances available
to the Company in respect of any accounting period
ended on or before Completion,
save where any such withdrawal or disclaimer is made at the
express written request of the Covenantor; and
(E) any other liability to Tax for which the Covenantor or any
member of the Covenantor's Group becomes liable as a result of
the failure by the Company or any member of the Buyer's Group
to discharge the same.
8.2 The covenant contained in clause 8.1 shall:
(A) extend to all costs reasonably and properly incurred by the
Covenantor or such other person in connection with such
liability to Tax under clause 8.1;
(B) not apply to any liability to Tax to the extent that the US
Buyer could claim payment in respect of it under clause 2; and
(C) apply mutatis mutandis to any liability to Tax for which the
Covenantor or any other person is liable as a result of the
application in any jurisdiction other than the United Kingdom
of any rule of law or legislation equivalent to that mentioned
in clause 8.1(A) and 8.1(C).
8.3 Clauses 3 and 6 of this deed (timing and resistance of claims) shall
apply to the covenants contained in this clause 8 as they apply to the
covenants contained in clause 2, replacing references to the Covenantor
by the US Buyer (and vice versa) and making any other necessary
modifications.
9. OVERPROVISIONS
9.1 The Covenantor may require at any time on or before 31 December 2004
the auditors for the time being of the Company to certify (at the
Covenator's expense) the existence and amount of any overprovision and
the UK Buyer and the US Buyer shall provide, or procure that the
Company provides, any information or assistance reasonably required for
the purpose of production by the auditors of a certificate to that
effect.
9.2 If any liability contingency or provision in the Accounts has proved to
be an overprovision then the amount of such overprovision shall be
dealt with in accordance with clause 9.3.
9.3 Where it is provided under clause 9.2 that any amount is to be dealt
with in accordance with this clause 9.3:
(A) the amount of the overprovision shall first be set against any
payment then due from the Covenantor under this deed in
respect of the Company, the Accounts of which have given rise
to an overprovision (the "RELEVANT COMPANY")
(B) to the extent there is an excess, a refund shall be made to
the Covenantor of any previous payment or payments made by the
Covenantor under this deed in respect of the Relevant Company
(and not previously refunded) up to the amount of the excess;
and
(C) to the extent that the excess referred to in clause 9.3(B) is
not exhausted under that clause, the remainder of that excess
shall be carried forward and set against any future payment or
payments which become due from the Covenantor to the US Buyer
under this deed in respect of the Relevant Company.
9.4 For the purposes of this clause an overprovision exists if:
(A) any liability in respect of Tax (including any liability in
respect of deferred Tax) has been overstated in the Accounts,
or such liability has been discharged or satisfied below the
amount attributed thereto in the Accounts, or such liability
has been discharged or satisfied below the amount attributed
thereto in the Accounts; or
(B) any contingency or provision in respect of Tax in the Accounts
proves to be overstated.
10. MISCELLANEOUS
10.1 Claims by the US Buyer under clause 2 of this deed shall be wholly
barred and unenforceable unless full written particulars of the claim
shall have been given to the Covenantor by not later than 5 p.m. on the
seventh anniversary of the date hereof.
10.2 In determining the amount of any recovery, the amount of any Relief
received by any company or person for the purposes of this deed, any
party hereto shall be entitled to require that the auditors of the
company or person in question (or if the auditors are unwilling or
unable to act such other firm of chartered accountants as may be agreed
between the parties or may, in default of agreement, be appointed at
the request (and expense) of either party by the President or next
available officer of the Institute of Chartered Accountants) shall be
instructed to determine the amount in question or whether any earlier
determination in respect thereof remains correct in the light of all
relevant circumstances including circumstances which have only become
known since such earlier determination and the fees of such auditors or
accountants shall be paid by such of the parties as the auditors or
accountants may themselves determine as being fair and reasonable. Any
determination made by the auditors or accountants shall be binding upon
the parties who shall make such adjusting payments (if any) as may be
required to reflect the same as soon as practicable thereafter.
10.3 The provisions of schedule 4 (Seller's Limitations on Liabilities) and
of clauses 12 (Assignment), 17 (Variations), 18 (Waiver/ Consents), 19
(Invalidity), 21 (Notices), 22 (Counterparts), 24 (Governing Law and
Jurisdiction) and any assignment of the Sale Agreement shall apply to
this deed as if the same were incorporated herein mutatis mutandis.
IN WITNESS whereof this deed has been executed on the date first above written.
Signed as a deed by ARMOR )
HOLDINGS INC. acting by its ) /s/ Warren B. Kanders
authorised representative ) Warren B Kanders
Chief Executive
Officer
Signed as a deed by ARMOR GROUP )
INTERNATIONAL INC. ) /s/ David Seaton
acting by its authorised representative ) David Seaton
Signed as a deed by ARMOR )
GROUP (UK) LIMITED )
acting by a director and its ) /s/ David Seaton
secretary/two directors ) David Seaton
Director
Secretary/Director