ARMOR HOLDINGS, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
August 21, 2001
The ▇▇▇▇▇-▇'▇▇▇▇ Company
▇'▇▇▇▇-▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Armoring Company
The O'Gara Company
O'Gara Security Associates, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs,
Reference is made to the Stock Purchase Agreement (the "Stock Purchase
Agreement"), dated as of April 20, 2001, as amended, by and among The
▇▇▇▇▇-▇'▇▇▇▇ Company, an Ohio corporation (the "Seller"), ▇'▇▇▇▇-▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇ Armoring Company, a Delaware corporation ("OHEAC"), The O'Gara
Company, an Ohio corporation ("O'Gara Company"), O'Gara Security Associates,
Inc., an Ohio corporation ("OSA" and, together with OHEAC and O'Gara Company,
the "Companies"), Armor Holdings, Inc., a Delaware corporation ("AHI"), and
Bengal Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of AHI ("Purchaser"). Capitalized terms used, but not defined herein, shall have
the respective meanings ascribed to them in the Stock Purchase Agreement.
This letter sets forth our understanding with respect to the
modification of the Stock Purchase Agreement in connection with the consummation
of the transactions contemplated thereby as follows:
1. SARL Essonne Securite. Notwithstanding the provisions of Section
7.15(e) of the Stock Purchase Agreement, (i) the Seller shall not cause
▇'▇▇▇▇-▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ France S.A. to transfer its ownership interest in SARL
Essonne Securite to the Seller or its designee prior to the Closing and (ii)
SARL Essonne Securite shall remain a subsidiary of ▇'▇▇▇▇-▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
France S.A. following the Closing. As used in the Stock Purchase Agreement, the
term "Transferred Company Subsidiaries" shall not include SARL Essonne Securite.
The last sentence of Section 4.5 is hereby deleted from the Stock Purchase
Agreement.
2. Minimum Tangible Net Assets. The Minimum Tangible Net Assets
Requirement is hereby reduced by $1,500,000 to $35,892,000.
3. TACOM. In connection with the provisions of Section 2.3(f)(i) of the
Stock Purchase Agreement, prior to the Closing, the Companies will reduce the
amount
of the account receivable from United States Tank Automotive Command set
forth on its books and records by $804,000. The parties acknowledge and agree
that the Purchase Price shall be reduced by an amount equal to $804,000.
4. Letter of Credit with respect to Brazilian and Philippines Tax
Liabilities. In lieu of the adjustment to the Purchase Price required pursuant
to Sections 2.3(f)(iii) and (iv) of the Stock Purchase Agreement, the Seller
shall cause KeyBank, National Association to establish in favor of AHI a letter
of credit in the amount of $1,500,000 in the form attached hereto as Exhibit A.
5. Subsidiary Guaranty. The Seller represents and warrants to AHI and
the Purchaser that the only Subsidiaries of the Seller which will not sign the
Subsidiary Guaranty Agreement, dated the Closing Date, in favor of AHI and the
Purchaser are Subsidiaries of the Seller, after giving effect to the Closing
under the Stock Purchase Agreement, that do not possess assets with a fair
market value in excess of $100,000.
6. Transfer of Aircraft Lease. The Seller represents and warrants that
the assignment from OHEAC to the Seller of all of OHEAC's Assignor's right,
title and interest under and in the Aircraft Lease, dated February 13, 1995, as
amended, relating to a used 1970 Gulfstream GII, model 1159, s/n 97, N930SD,
with 2 Rolls Royce Spey 511-8 Engines, Serial Numbers (LE) 8710 and (RE) 8712
(the "Lease"), has transferred from OHEAC and vested in the Seller all of such
right, title, and interest in and all liabilities under the Lease.
7. Russian Subsidiaries. (a) Notwithstanding the provisions of Section
6.2(x) and 7.9 of the Stock Purchase Agreement, ▇'▇▇▇▇-▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ CIS,
▇'▇▇▇▇ Security Systems, Inc., and O'▇▇▇▇ ▇▇▇▇▇ Automotive (Russia) (the
"Russian Companies") shall not transfer the Russian Licenses to a designee of
the Purchaser and the Russian Licenses shall not be terminated at or prior to
Closing. The Russian Companies shall continue to operate and do business but
shall, commencing within ten days following the closing, to the extent permitted
by law, sell products and services under a brand name, and otherwise conduct all
business operations under an assumed name, that does not include "O'Gara" or
words similar to or susceptible to confusion with "O'Gara". No later than 9
months after the date hereof the Seller shall cause the Russian Companies to (i)
cease operations, (ii) cancel the Russian Licenses, or (iii) obtain a new
license to conduct their business in Russia and cancel the Russian Licenses.
Once the new licenses have been granted, the Russian Licenses shall be
terminated as soon as reasonably practical thereafter. The Seller agrees that if
none of actions (i), (ii) or (iii) set forth in the third sentence of this
paragraph 7(a) has been completed within nine months after the Closing Date, the
Seller shall pay to AHI $100,000 for each 90 day period ending after such 9
month period until such time as one of actions (i), (ii) or (iii) set forth in
the third sentence of this paragraph 7(a) has been satisfied. Such payment shall
be made in immediately available funds to AHI on the 90th day of each such
period. In addition to, and not in limitation of, the indemnification provided
for in Section 5.3(a)(iv) of the Stock Purchase Agreement, the Seller and each
of the Russian Companies shall indemnify and hold harmless AHI, the Purchaser,
and the Companies against any Losses arising out of, relating to, resulting from
or caused (whether in whole or in part) by any
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transaction, event, condition, occurrence or situation in any way relating to
the operation of the Russian Companies and their Subsidiaries, including
operating under the Russian Licenses and/or under the name "O'Gara".
(b) Prior to the completion of the change of control of the
Russian Companies, the Seller shall permit the Purchaser to inspect the
facilities of the Russian Companies during reasonable business hours on
reasonable notice.
8. Indemnification with Respect to the Registration Statement. Section
7.13(c) of the Stock Purchase Agreement is hereby amended by adding immediately
following the phrase "The Seller shall indemnify and hold harmless AHI" the
words "and each person, if any, who controls AHI within the meaning of the
Securities Act." Section 7.13(c) of the Stock Purchase Agreement is further
hereby amended by adding immediately following the phrase "AHI shall indemnify
and hold harmless the Seller" the words "and each person, if any, who controls
the Seller within the meaning of the Securities Act." In the event AHI files
after the date hereof any report under Section 13 of the Exchange Act (a "34 Act
Report") which is incorporated by reference into the registration statement
prior to the sale of all of the Consideration Shares under the Registration
Statement, AHI shall, to the extent reasonably practicable, before such filing,
afford to executive management of the Seller and Seller's legal counsel and
independent auditors (each a "Reviewing Party") reasonable access to executive
management of AHI, and such information regarding the business, assets,
properties and financial condition of AHI as any Reviewing Party shall
reasonably request, solely for the purpose of permitting the Seller to perform
its due diligence review of such 34 Act Report to satisfy its obligations under
the Securities Act. Notwithstanding the foregoing, no such access shall be
provided to any Reviewing Party unless Seller executes and delivers to AHI any
agreement reasonably requested by AHI pursuant to which it is obligated to
maintain the confidentiality of the information any Reviewing Party is given
access to and not to use such information other than for the purpose set forth
in this Section 8. If, prior to the sale of all of the Consideration Shares
under the Registration Statement, any event shall have occurred as a result of
which the Registration Statement as amended or supplemented would contain an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statement therein in light of the circumstances under which
they made not misleading AHI shall (i) notify the Seller of the occurrence of
such and (ii) use its commercially reasonable efforts to file as soon as
reasonably practicable with the Commission any amendment to the Registration
Statement so that the Registration Statement no longer contains such untrue
statement or omission. The Seller will comply with applicable law in all
material respects in connection with sales it directs of the Consideration
Shares.
9. MCI Contract. Each of the Companies agrees to pay, in accordance
with the normal payment procedures currently in effect, any charges billed to it
under the Special Customer Arrangement for MCI Worldcom On-Net Services (the
"MCI Agreement"), dated September 8, 1999, between the Seller and MCI
Telecommunications Corporation ("MCI"); provided, that each such Company shall
have the right to review and approve such charges and to withhold payment of
such charges in
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the event of a good faith dispute. The Seller agrees not to amend or terminate
the MCI Agreement for so long as the Companies are paying, or in good faith
disputing, the charges in accordance with the previous sentence. The Companies
acknowledge that the MCI Agreement terminates in accordance with its terms in
October 2001.
10. Assets of Philippines Companies. (a) Section 7.15(d) of the Stock
Purchase Agreement is deleted in its entirety and in lieu thereof is inserted
the following: "Prior to the Closing Date, the Seller shall cause OHEAC to
transfer to the Seller or its designee The ▇▇▇▇▇-▇'▇▇▇▇ Company (Phils.), Inc.
("K-O Phils") and O'Gara Philippines, Inc. (together with, K-O Phils, the
"Philippines Companies)." Such transfers shall be "Company Subsidiary
Transfers," as used in the Stock Purchase Agreement and each of such companies
shall be deemed a "Transferred Company Subsidiary," as used in the Stock
Purchase Agreement. For purposes of Article IV of the Stock Purchase Agreement,
K-O Phils shall be deemed a Company Subsidiary.
(b) The Seller shall cause K-O Phils to sell and transfer to a
designee of AHI simultaneously with the closing of the Stock Purchase Agreement,
all of the assets set forth on balance sheet, dated June 30, 2001, of K-O Phils
(the "K-O Phils Balance Sheet") and all assets thereafter acquired, less any
assets disposed of, by K-O Phils in the ordinary course of business, and a
designee of AHI shall assume all of the liabilities set forth on the K-O Phils
Balance Sheet and all liabilities thereafter incurred by K-O Phils in the
ordinary course of business pursuant to a deed of assignment in a form
reasonably acceptable to AHI, the Purchaser, and the Seller (the "Deed of
Assignment").
(c) The parties acknowledge and agree that the adjustment to the
Purchase Price set forth in Section 2.3(f)(iii) of the Stock Purchase Agreement
shall not be made and that liabilities set forth on Schedule 2.3(f) to the Stock
Purchase Agreement shall remain liabilities of the Philippines Companies.
(d) From and after the Closing Date, the Philippines Companies
will not conduct any operations in the Philippines other than the liquidation of
the Philippines Companies. None of the Seller, the Philippines Companies, nor
their Affiliates shall use the name "O'Gara", or words similar to or susceptible
to confusion with "O'Gara", for any trade or business in the Philippines.
Notwithstanding Section 7.9 of the Stock Purchase Agreement, Seller will use its
commercially reasonable efforts to change the names of the Philippines Companies
as soon as reasonably practicable, but in no event later than 30 days after the
Closing Date. Seller shall indemnify and hold harmless AHI, the Purchaser and
the Companies against any Losses arising out of, relating to or resulting from
the Philippines Companies continuing to use the name "O'Gara", or words similar
to or susceptible to confusion with "O'Gara", or from the failure to change the
name of one or both of the Philippines Companies.
11. O'Gara France S.A.; ▇'▇▇▇▇-▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Armoring Company
Limited. AHI and the Purchaser acknowledge that on the Closing Date the Republic
of Ireland will hold one outstanding share of the capital stock of O'Gara France
S.A, which share was transferred to it upon the dissolution of ▇'▇▇▇▇-▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇ Armoring Company Limited ("O'Gara Ireland"). The Seller agrees to use
commercially reasonable
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efforts to cause, as soon as possible but in no event later than the first
anniversary after the date hereof, O'Gara Ireland to be reinstated as an active
company and, following such reinstatement or otherwise, to cause O'Gara Ireland
to transfer such outstanding share of capital stock of O'Gara France S.A. to
OHEAC or its designee as soon as possible under applicable law. The Seller
hereby indemnifies AHI, the Purchaser, and OHEAC, and each of their respective
affiliates, successors, and assigns against any and all Losses arising out of,
relating to, or resulting from the failure of OHEAC to own all of the
outstanding shares of the capital stock of O'Gara France S.A.
12. Amendments to Schedules. The Schedules to the Stock Purchase
Agreement are hereby amended as follows:
(a) Schedule 4.1(a) is amended to provide that O'Gara Security
Associates, Inc. was incorporated in the State of Ohio and that OHEAC is
qualified to do business in New York, Ohio and Massachusetts.
(b) Schedule 4.1(b) is amended to provide that item 13 is The
▇▇▇▇▇-▇'▇▇▇▇ Company (Philippines), Inc., a Philippines corporation.
(c) Schedule 4.16(b) is amended to remove item 4 thereof.
(d) Section 4.10(a) is amended to provide that OHEAC has 13,517
shares of common stock, no par value, issued and outstanding and owned by the
Seller.
13. Representations and Warranties. Each party represents and warrants
to the others that (i) it has all necessary corporate power and authority to
enter into this letter agreement and to perform its obligations hereunder; (ii)
this letter agreement has been duly executed and delivered by it and constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with the terms of this letter agreement, except as limited by bankruptcy,
insolvency, or other laws relating to the enforcement of creditor's rights and
by general principles of equity; and (iii) the execution, delivery and
performance of this letter agreement does not and will not, conflict with any
law, regulation, court order, or judgment applicable to it, violate its Charter
or By-laws, or result in any breach or default under, require the consent under,
or give to others any rights of termination or acceleration of any right or
obligation of it.
The representations, warranties and covenants contained herein and
in the Deed of Assignment with respect to the transfer of the assets of K-O
Phils to Armor's designee shall be deemed representations, warranties and
covenants made under the Stock Purchase Agreement and are entitled to the
benefits of the Stock Purchase Agreement, including without limitation Article
V.
14. Securify, Inc. Prior to the Closing Date, the Seller shall cause
OHEAC to transfer to the Seller or its designee all of its interest in Securify,
Inc. The foregoing transfer shall be a "Company Subsidiary Transfer" as used in
the Stock Purchase Agreement, and Securify, Inc. shall be a "Transferred Company
Subsidiary" as used in the Stock Purchase Agreement.
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15. Letter of Credit. Reference is made to Section (1) (B) of Exhibit B
to the Letter of Credit to be issued by KeyBank National Association for the
benefit of AHI at the Closing in the form attached hereto as Exhibit A. AHI
agrees that it will no longer have any right to cash or renew the letter of
credit after the earlier of (i) August 21, 2008 or (ii) the date Seller has no
further indemnity obligations under the Stock Purchase Agreement with respect to
the Brazilian Tax Related Losses, the tax issues identified on Schedule 2.3(f)
of the Stock Purchase Agreement, as amended, and the letter agreement dated as
of August 21, 2001 between AHI and Seller with respect to certain liabilities
related to leases with Jacom. Until such letter of credit is delivered by
KeyBank to AHI, AHI has the right to cause a hold back of $1.5 million from the
proceeds of the sale of the Consideration Shares in the brokerage account
maintained by Seller with ▇▇ ▇▇▇▇▇ Securities Incorporated by delivering a
letter in the form attached hereto as Exhibit B.
16. Indemnity. Section 5.3(a) of the Stock Purchase Agreement is hereby
amended by adding after item (viii) the following "(ix) any liability with
respect to any item set forth on Schedule 2.3(f), (x) any liability arising out
of the dissolution or reinstatement of O'Gara Ireland" and item (ix) shall be
renumbered item (xi).
17. Broker's Fees. As used in Schedule 2.6 to the Stock Purchase
Agreement, "net proceeds" shall include the Commissions.
18. Consideration Shares. The parties agree that the number of shares
of AHI Common Stock which shall be delivered at the Closing shall be 1,009,422
shares of AHI Common Stock.
19. Miscellaneous.
(a) References to Agreement. On and after the date hereof, each
reference in the Stock Purchase Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Stock Purchase
Agreement shall mean and be a reference to the provisions of the Stock Purchase
Agreement as amended hereby.
(b) No Other Changes. Except as specifically amended by this
letter agreement, the Stock Purchase Agreement shall remain in full force and
effect in accordance with its terms.
(c) Notices. Any notice, demand, claim or other communication
under this letter agreement shall be in writing and shall be deemed to have been
given upon the delivery, mailing or transmission thereof, as the case may be, if
delivered personally or sent by certified mail, return receipt requested,
postage prepaid, or sent by facsimile or prepaid overnight courier to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
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If to the Seller: If to AHI or the Purchaser:
c/o Kroll Associates ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: President Attn.: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP ▇▇▇▇ ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 1350 Avenue of the America
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 26th Floor
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(d) Headings; Construction. The section and other headings
contained in this letter agreement are for reference purposes only and shall not
affect the meaning or interpretation of any provisions of this letter agreement.
Any reference in this letter agreement to a section, exhibit or schedule shall,
unless otherwise expressly indicated, refer to a section of or an exhibit or
schedule to this letter agreement.
(e) Governing Law; Jurisdiction and Venue. This letter agreement
has been entered into and shall be construed and enforced in accordance with the
laws of the State of New York without reference to the choice of law principles
thereof. This letter agreement shall be subject to the exclusive jurisdiction of
the state or federal courts sitting in New York County, New York. The parties to
this letter agreement agree that any breach of any term or condition of this
letter agreement shall be deemed to be a breach occurring in the State of New
York by virtue of a failure to perform an act required to be performed in the
State of New York and irrevocably and expressly agree to submit to the
jurisdiction of the United States District Court for the Southern District of
New York or courts of the State of New York for the purpose of resolving any
disputes among the parties relating to this letter agreement or the transactions
contemplated hereby. The parties irrevocably waive, to the fullest extent
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this letter agreement, or any judgment entered by any court in respect hereof
brought in New York County, New York, and further irrevocably waive any claim
that any suit, action or proceeding brought in New York County, New York has
been brought in an inconvenient forum. The parties hereto agree to service of
process by certified or registered United States mail, postage prepaid,
addressed to the party in question.
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(f) Further Assurances. The parties hereto shall deliver any and
all other instruments or documents reasonably requested by the other party in
order to give effect to all of the terms and provisions of this letter
agreement.
(g) Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
[Remainder of this page intentionally left blank]
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If the foregoing accurately reflects our agreements, please so indicate
by signing a copy of this letter agreement and returning it to the undersigned.
Sincerely,
Armor Holdings, Inc. Bengal Acquisition Corp.
By:____________________________ By:____________________________
Name:_______________________ Name:_______________________
Title:______________________ Title:______________________
ACCEPTED AND AGREED:
The ▇▇▇▇▇-▇'▇▇▇▇ Company ▇'▇▇▇▇-▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Armoring Company
By:____________________________ By:____________________________
Name:_______________________ Name:_______________________
Title:______________________ Title:______________________
The O'Gara Company O'Gara Security Associates, Inc.
By:____________________________ By:____________________________
Name:_______________________ Name:_______________________
Title:______________________ Title:______________________
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