PROMISSORY NOTE
$ 2,300,000 November 26, 2003
WHEREAS Armor Holdings Limited, a United Kingdom Corporation (the "Maker"),
executed two promissory notes in the principal amounts of (pound)4,635,000 (the
"First Note") and (pound)3,143,000 (the "Second Note"), respectively, in favour
of Armor Holdings Inc., a Delaware corporation (the "Payee") dated 17 April
1997.
WHEREAS by a deed dated November 6, 2003, Armor Holdings Inc. waived all its
rights to receive interest under the First Note and further on November 7, 2003
set-off an amount equal to (pound)3,031,023 against its outstanding principal
amount as payment for an inter-company transfer of shares thereby reducing the
principal amount outstanding under the First Note to (pound)1,603,977.
WHEREAS following certain repayments and waivers the Payee and the Maker wish to
issue a promissory note in substitution for the First Note and the Second Note
(together referred to as the "Notes") denominated in U.S. dollars.
WHEREAS this note is made pursuant to a sale and purchase agreement (the
"Agreement") dated November 26 2003 between, inter alia, the Payee and
ArmorGroup International Limited (the "Buyer").
FOR THE VALUE RECEIVED, following certain repayments and waiver of principal
under the First Note and the Second Note and the waiver by the Payee of all
interest accrued and accruing under the Second Note (as such repayments and
waiver are acknowledged and accepted by the Payee by its countersignature of
this note) the Maker and Payee agree that the principal amounts under the First
Note and Second Note be (i) converted from pounds sterling into U.S. dollars at
an exchange rate of (pound)1 : $1.5104 (being the exchange rate prevailing at
the time of issue of the Notes); and (ii) reconstituted subject to the terms set
out herein.
1. The Maker promises to pay to the order of the Payee or its successors
by operation of law, to the Armor Holdings Inc. Master Account at Bank
of America, 9000 South Side Boulevarde, Jacksonville, Florida 32256,
ABA# 063100277, Account No. 002101236613 (or as the holder of this note
may designate from time to time in writing, subject to the Payee having
first confirmed the same to the Buyer in writing) the amount of two
million three hundred thousand U.S. dollars ($2,300,000) (the
"Principal Amount") in immediately available funds. The Principal
Amount shall be repayable as follows:-
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REPAYMENT DATE AMOUNT / $
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31 December 2003 125,000
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31 January 2004 125,000
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29 February 2004 125,000
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31 March 2004 125,000
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31 July 2004 300,000
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31 August 2004 300,000
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30 September 2004 300,000
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31 October 2004 300,000
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25 November 2004 600,000
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If any Repayment Date does not fall on a business day (in New York),
the relevant payment shall be made on the following business day. This
note shall not bear interest.
2. All amounts due hereunder are payable in funds which shall be available
no later than 3 p.m. (New York time) on the respective due dates.
3. The Maker agrees that, for so long as any unpaid Principal Amount shall
remain outstanding hereunder, it will:
(i) do or cause to be done all things necessary to preserve and
keep in full force its corporate existence;
(ii) not declare, pay or set aside for payment any dividend on any
of the Maker's capital stock or make any distribution in
respect thereof, either directly or indirectly, and whether in
cash, obligations or other property;
(iii) give the Payee notice, within five days after it becomes known
to the Maker, of (a) any material casualty to any property, or
any other force majeure event, the result of any of which
might have a material adverse effect upon the financial
condition or results of operations or business of the Maker,
and (b) all litigation, proceedings, investigations or
disputes affecting the Maker from which an adverse
determination to the Maker would have a material adverse
effect upon the financial condition or results of operations
or business of the Maker or its ability to perform its
obligations hereunder provided that in each case the matter
concerned is Material. For these purposes, a matter will be
"Material" if it would give rise to an economic loss of more
than $250,000; and
(iv) notify the Payee of any event which constitutes an event of
default under the Maker's senior debt facilities with Barclays
Bank Plc.
4. The entire outstanding Principal Amount shall, at the option of the
Payee, be accelerated and become immediately due and payable upon the
occurrence of any of the following events (each, an "Event of
Default"):
(i) if the Maker should fail to procure any one of the payments
due in the accordance with paragraph (1) above, for value on
the due date specified and the same shall remain unpaid for
more than five business days (in New York) from the due date;
(ii) if an administrator or administrative receiver or other
receiver or liquidator (or similar officer) should be
appointed over the Buyer, ArmorGroup International Inc,
ArmorGroup (UK) Limited, the Maker 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) (and for the purposes of this paragraph
(ii), "MATERIAL SUBSIDIARY" means a subsidiary of the Buyer
incorporated in England and Wales (a) whose gross assets
represent 5 per cent or more of the consolidated gross assets
of the Buyer and its subsidiaries as a whole and (b) whose
EBITDA represent
5 per cent or more of the EBITDA of the Buyer and its
subsidiaries as a whole, in each case ; or in each case, based
on the most recent financial statement of the Buyer and its
subsidiaries readily available);
(iii) if the Buyer should fail to procure any of the payments
mentioned in clause 3.5(B) of the Agreement for value on the
Payment Date specified herein, and the same should remain
unpaid for more than five business days (in New York).
5. The Maker shall have the right to prepay this note, in whole at any
time or in part, from time to time, without premium or penalty.
6. The Maker hereby waives presentment for payment, notice of dishonour,
protest and notice of protest and other notices of every kind, and, to
the fullest extent permitted by law, all rights to plead any statute of
limitations as defense to any action hereunder. No delay on the part of
the holder hereof in exercising any rights hereunder shall operate as a
waiver of such rights.
7. The Maker agrees to pay all reasonable out-of-pocket expenses of the
holders hereof (including filing fees, title insurance fees and related
expenses and fees and expenses of its counsel) in connection with the
enforcement of this note.
8. No modification, amendment or waiver of any provision of this note, nor
consent to any departure by the Makers therefrom shall in any event be
effective unless the same shall be in writing and signed by the holder
hereof and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or
demand on the Maker in any case shall entitle the Maker to any other or
further notice or demand in the same, similar or other circumstances.
9. In case any one or more provisions contained in this note shall be
invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
10. This note shall not be transferable to any person and shall be payable
only to Armor Holdings, Inc and its successors in law.
11. This note shall be interpreted, governed by, and construed in
accordance with, the laws of England and Wales, without giving effect
to its principles of conflict of laws.
ARMOR HOLDINGS LIMITED
By: /s/ David Seaton
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Name: David Seaton
Title: Director
In acknowledgement and agreement:-
ARMOR HOLDINGS INC.
By: /s/ Robert Schiller
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Name: Robert Schiller
Title: Chief Operating Officer and
Chief Financial Officer