EXHIBIT 10.16
SUBSCRIPTION AND STRUCTURING AGREEMENT
AGREEMENT (this "Agreement"), made as of the ____ day of December,
2003, by and among POINT BLANK BODY ARMOR INC., a Delaware corporation ("Point
Blank"), HIGHTOWER CAPITAL MANAGEMENT, LLC, a Delaware limited liability company
("Hightower"), and DHB INDUSTRIES, INC., a Delaware corporation ("DHB");
W I T N E S S E T H:
WHEREAS, Point Blank is currently a wholly-owned subsidiary of DHB; and
WHEREAS, Hightower wishes to participate, as a consultant to and/or
representative of Point Blank, in the promotion and marketing of Point Blank's
products, primarily to new customers located in the Middle East; and
WHEREAS, Hightower believes that its ability to market Point Blank's
products will be enhanced if it is an owner of Point Blank; and
WHEREAS, in order to assist Hightower in its efforts as aforesaid,
Hightower has requested, and DHB and Point Blank have agreed, subject to the
terms and conditions of this Agreement, to permit Hightower to subscribe for and
purchase a certain amount of the shares of common stock(the "Common Stock"), of
Point Blank (as more fully set forth herein); and
WHEREAS, Hightower currently owns and holds inventories of ballistic
plates and other goods usable in Point Blank's ordinary business;
WHEREAS, DHB is currently the sole shareholder of NDL Products; and
WHEREAS, DHB and Hightower believe that it will be beneficial to the
future business of Point Blank to increase the capital of Point Blank and for
Point Blank to directly control NDL Products;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. SUBSCRIPTION. Subject to the terms and conditions of this Agreement,
Hightower hereby subscribes for and agrees to acquire such number of shares of
Common Stock of Point Blank (the "Shares") as have an aggregate value of
$1,650,000, such number being calculated by dividing the appraised value of
Point Blank (as determined in accordance with paragraph 3 below) by the 1,500
currently outstanding shares of Common Stock of Point Blank. The Shares shall at
all times be held by Hightower subject to the terms and conditions of this
Agreement.
2. PRICE CONSIDERATION. The consideration payable by Hightower for the
Shares shall consist of first quality, good condition ballistic plates usable in
Point Blank's ordinary business and having an aggregate list price of
$1,650,000. Upon satisfaction of the conditions precedent set forth in paragraph
3 below, Hightower shall transfer and deliver to Point Blank such quantity of
such first quality, good condition ballistic plates, in payment for the Shares.
Upon receipt of such goods, Point Blank shall issue to Hightower a share
certificate representing the Shares.
3. CONDITIONS PRECEDENT. Hightower's obligation to purchase and pay for
the Shares is subject to (a) Point Blank filing a certificate of amendment to
its certificate of incorporation, increasing its authorized common shares to a
number sufficient to permit the issuance of the Shares and the shares of Common
Stock issuable pursuant to this paragraph 3 below, (b) DHB contributing to the
capital of Point Blank a number of shares of common stock of NDL Products, Inc.
("NDL") having an aggregate appraised value equal to ten (10%) percent of the
appraised value of Point Blank, in consideration of which Point Blank shall
issue to DHB a number of shares of common stock of Point Blank having an
equivalent value (calculated in accordance with the appraisal hereinafter
described) to the additional capital contribution being made by DHB to Point
Blank; PROVIDED, HOWEVER, that if the appraised value of NDL is less than ten
(10%) percent of the appraised value of Point Blank, then this condition may be
satisfied by DHB's contribution to the capital of Point Blank of (i) all of the
outstanding shares of capital stock of NDL, and (ii) cash in an amount equal to
the amount by which the appraised value of NDL is less than ten (10%) percent of
the appraised value of Point Blank, in consideration of which Point Blank shall
issue to DHB a number of shares of common stock of Point Blank having an
equivalent value (calculated in accordance with the appraisal hereinafter
described) to the additional capital contribution being made by DHB to Point
Blank and (c) there shall not have occurred any material adverse affect on the
business, assets, liabilities, condition (financial or otherwise) or results of
operations of Point Blank. DHB hereby confirms that it has engaged Empire
Valuation Consultants, Inc. ("Empire") to perform appraisals of the businesses
of Point Blank and NDL, and the parties hereby agree, for purposes of this
Agreement, that the appraisal determinations rendered by Empire shall be final
and binding. In the event that Empire has not rendered its written appraisals,
or DHB fails to file the aforedescribed certificate of amendment and/or make the
additional capital contribution to Point Blank in the amount contemplated
herein, in either case on or before December 31, 2003, then this Agreement shall
become null and void AB INITIO.
4. RESTRICTIONS ON TRANSFER. The Shares shall at all times be subject
to the following restrictions:
(a) Hightower shall not at any time sell, assign, transfer,
alienate, pledge, hypothecate, or otherwise dispose of any legal or beneficial
interest in any of the Shares (any such transaction being hereinafter referred
to as a "Transfer"), unless (i) Hightower receives a BONA FIDE offer from an
unaffiliated third party for the purchase of the Shares for cash, (ii) Hightower
gives written notice of such offer to DHB, setting forth the name, address,
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telephone number and principal line of business of the proposed Transferee, and
the material terms and conditions of the proposed Transfer (including any
relevant writings between Hightower and the proposed Transferee), and (iii)
Hightower permits DHB to exercise an exclusive option, valid for a period of
thirty (30) days after DHB's receipt of such written notice of proposed
Transfer, to purchase (or to permit Point Blank to redeem) all (but not less
than all) of the offered Shares at a cash purchase price equal to the purchase
price pursuant to the BONA FIDE offer, and payable on the terms of the BONA FIDE
offer. In the event that DHB fails to exercise its exclusive option within such
thirty (30) day period, Hightower shall be permitted to effect the proposed
Transfer solely to the Transferee and solely on the terms and conditions set
forth in Hightower's notice of proposed Transfer, provided that, if such
transaction is not completed within sixty (60) days after the expiration of
DHB's exclusive option period hereunder, then the provisions of this paragraph
4(a) shall again be applicable. Any Transferee (other than DHB or Point Blank)
which acquires any Shares shall also be subject to the provisions of this
paragraph 4. Any Transfer in violation of this paragraph 4 shall be null and
void and shall not be recognized by Point Blank for any purpose.
(b) In the event that, and at any time after, Hightower
terminates (for any reason or for no reason) the business or consulting
relationship between Point Blank and Hightower, DHB shall have the right to
purchase (or to designate Point Blank to redeem) the Shares at a cash purchase
price equal to the fair value thereof (without discount for non-marketability or
minority interest) as of the close of the last full calendar month immediately
preceding the date of DHB's notice of its exercise of its option hereunder, as
determined by an independent appraiser selected by DHB and reasonably acceptable
to Hightower. Such purchase or redemption shall be completed within thirty (30)
days after receipt by DHB and Hightower of the appraiser's appraisal report
(c) The provisions of this paragraph 4 shall also be fully
applicable to any and all shares or other securities which may be issued in
respect of the Shares by reason of any stock split, stock dividend, combination
of shares, recapitalization or other such event which may occur at any time and
from time to time subsequent to the date hereof, and all such shares and other
securities shall constitute part of the "Shares" for all purposes of this
paragraph 4.
(d) The certificate(s) representing the Shares shall at all
times bear a conspicuous legend giving notice of the existence and requirements
of this Agreement.
5. REPRESENTATIONS AND WARRANTIES.
(a) Each party hereby represents and warrants to each other
party that (i) such party is a corporation or a limited liability company (as
the case may be) duly organized, validly existing and in good standing under the
laws of its jurisdiction of formation, (ii) such party's execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate or company action (as the case may be), and (iii) this Agreement
constitutes the valid and binding agreement of such party, enforceable against
such party in accordance with its terms.
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(b) Each party further represents and warrants to each other
party that the execution, delivery and performance by such party of this
Agreement will not conflict with or result in a breach under (i) such party's
organizational documents, (ii) any law or governmental regulation or (iii) any
contract, agreement, note, mortgage, or other arrangement to which such party is
bound, other than in the case of clauses (ii) and (iii), such conflicts or
breaches as will not have a material adverse effect on such party.
(c) Each party further represents and warrants to each other
party that the execution, delivery and performance by such party of this
Agreement do not and will not require any consent, approval or authorization of,
or filing of any notices of or with, any governmental or regulatory authority or
any third party.
(d) DHB and Point Blank hereby further represent and warrant
to Hightower that (i) the authorized and outstanding shares of capital stock of
Point Blank consists only of 1,500 shares of Common Stock, all of which are
fully paid and nonassessable, (ii) there are no outstanding options, warrants,
convertible securities or other rights to purchase or acquire any capital stock
of Point Blank, and (iii) upon Hightower's payment for the Shares in accordance
with paragraph 2 above, the Shares will be duly authorized, validly issued,
fully paid and nonassessable, and Hightower will acquire the Shares free and
clear of all liens and encumbrances (other than such liens and encumbrances
created by this Agreement or by Hightower.
(e) Hightower hereby further represents and warrants that (i)
it has received to its satisfaction all information that it has requested with
respect to DHB, Point Blank and NDL, (ii) it is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended, and (iii) it will be acquiring the Shares for its own account for
investment, and not with a view to resale or distribution in violation of any
federal or state securities laws.
(f) The parties intend that the transfers by DHB and Hightower
to Point Blank described in this Agreement shall each be treated as a transfer
solely in exchange for stock that is described in section 351 of the Internal
Revenue Code of 1986, as amended, and agree to report the transfers for income
tax purposes in a manner consistent with such characterization.
6. NOTICES. Any notice pursuant to paragraph 4 above or under this
paragraph 6 shall be in writing and shall be deemed to have been given when
delivered personally, one (1) business day after being sent by reputable
overnight courier with all charges prepaid or billed to the account of the
sender, or five (5) days after being mailed by certified mail, return receipt
requested, addressed (a) if to Point Blank, to it c/o DHB Industries, Inc., 555
Westbury Avenue, Carle Place, New York 11514, Attn: Dawn Schlegel, or at such
other address as Point Blank may hereafter designate to Hightower by written
notice, and (b) if to Hightower, to it at c/o Shearman & Sterling, 599 Lexington
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Avenue, New York, NY 10022 Attn: Andrew Noreuil, Esq., or at such other address
as Hightower may hereafter to designate to Point Blank by written notice.
7. GENERAL.
(a) Neither this Agreement nor any of the terms or conditions
hereof may be waived, amended or modified except by means of a written
instrument duly executed by the party to be charged therewith. Any waiver or
amendment shall only be applicable in the specific instance, and shall not
constitute or be construed as a waiver or amendment in any other or subsequent
instance. No failure or delay on the part of any party in respect of any
enforcement of obligations hereunder shall in any manner affect such party's
right to seek or effect enforcement at any other time or in respect of any other
required performance.
(b) Neither this Agreement nor any rights or obligations
hereunder may be assigned by any party without the express prior written consent
of each other party.
(c) The captions and paragraph headings used in this Agreement
are for convenience of reference only, and shall not affect the construction or
interpretation of this Agreement or any of the provisions hereof.
(d) This Agreement, and all matters or disputes relating to
the validity, construction, performance or enforcement hereof, shall be
governed, construed and controlled by and under the laws of the State of New
York.
(e) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
(f) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original hereof, but all of
which together shall constitute one and the same instrument.
(g) Except as otherwise set forth or referred to in this
Agreement, this Agreement constitutes the sole and entire agreement and
understanding between the parties hereto as to the subject matter hereof, and
supersedes all prior discussions, agreements and understandings of every kind
and nature between them as to such subject matter.
(h) This Agreement is intended for the sole and exclusive
benefit of the parties hereto and their respective successors and permitted
assigns, and no other person or entity shall have any right to rely on this
Agreement or to claim or derive any benefit herefrom absent the express written
consent of the party to be charged with such reliance or benefit.
(i) If any provision of this Agreement is held invalid or
unenforceable, either in its entirety or by virtue of its scope or application
to given circumstances, such provision shall thereupon be deemed modified only
to the extent necessary to render same valid, or not applicable to given
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circumstances, or excised from this Agreement, as the situation may require; and
this Agreement shall be construed and enforced as if such provision had been
included herein as so modified in scope or application, or had not been included
herein, as the case may be.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
POINT BLANK BODY ARMOR, INC.
BY________________________________
HIGHTOWER CAPITAL MANAGEMENT, LLC
BY_______________________________
DHB INDUSTRIES, INC.
BY_________________________________
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