EXHIBIT 10.2

 

PROMISSORY NOTE

 

$30,000,000.00

 

May 6, 2008

 

Force Protection, Inc.

9801 Highway 78

Ladsdon, South Carolina 29456

 

Force Protection Technologies, Inc. 9801 Highway 78

Ladson, South Carolina 29456

 

Force Protection Industries, Inc.

9801 Highway 78

Ladson, South Carolina 29456

Individually and collectively, “Borrower”)

 

Wachovia Bank, National Association

177 Meeting Street, Suite 450

Charleston, South Carolina 29401

Hereinafter referred to as “Bank”)

 

Borrower promises to pay to the order of Bank, in lawful money of the United
States of America by debiting a direct deposit account as herein provided, the
sum of Thirty Million and No/100 Dollars ($30,000,000.00) or such sum as may be
advanced and outstanding from time to time, with interest on the unpaid
principal balance at the rate and on the terms provided in this Promissory Note
(including all renewals, extensions or modifications hereof, this “Note”).

 

RENEWAL/MODIFICATION. This Promissory Note renews, extends and/or modifies that
certain Promissory Note dated July 20, 2007 (the “Original Promissory Note”),
evidencing an original principal amount of $50,000,000.00. This Promissory Note
is not a novation.

 

LOAN AGREEMENT. This Note is subject to the provisions of that certain Loan
Agreement between Bank and Borrower of even date herewith, as modified from time
to time.

 

LINE OF CREDIT. Borrower may borrow, repay and reborrow, and, upon the request
of Borrower, Bank shall advance and readvance under this Note from time to time
until the maturity hereof (each an “Advance” and together the “Advances”), so
long as the total principal balance outstanding under this Note at any one time
does not exceed the principal amount stated on the face of this Note, subject to
the limitations described in any loan agreement to which this Note is subject.
Bank’s obligation to make Advances under this Note shall terminate if Borrower
is in Default. As of the date of each proposed Advance, Borrower shall be deemed
to represent that each representation made in the Loan Documents is true as of
such date, except to the extent of changes in the ordinary course of business
that singly or in the aggregate are not materially adverse and to the extent
such representations and warranties expressly relate to an earlier date.

 

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If Borrower subscribes to Bank’s cash management services and such services are
applicable to this line of credit, the terms of such service shall control the
manner in which funds are transferred between the applicable demand deposit
account and the line of credit for credit or debit to the line of credit.

 

USE OF PROCEEDS. Borrower shall use the proceeds of the loan(s) evidenced by
this Note for the commercial purposes of Borrower, as follows: for working
capital.

 

SECURITY. Borrower has granted or will grant Bank a security interest in the
collateral described in the Loan Documents and such other security instruments
as are executed from time to time, including, but not limited to, personal
property collateral described in that certain Security Agreement, dated July 20,
2007.

 

INTEREST RATE. Interest shall accrue on the unpaid principal balance of this
Note from the date hereof at the LIBOR Market Index Rate plus 2.0%, as that rate
may change from day to day in accordance with changes in the LIBOR Market Index
Rate (“Interest Rate”). “LIBOR Market Index Rate”, for any day, means the rate
for 1 month U.S. dollar deposits as reported on Telerate Successor Page 3750 as
of 11:00 an., London time, on such day, or if such day is not a London business
day, then the immediately preceding London business day (or if not so reported,
then as determined by Bank from another recognized source or interbank
quotation).

 

DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (as defined herein) occurs and as long as a Default continues, all
outstanding Obligations, other than Obligations under any swap agreements (as
defined in 11 U.S.C. § 101, as in effect from time to time) between Borrower and
Bank or its affiliates, shall bear interest at the Interest Rate plus 3%
(“Default Rate”). The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.

 

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall
be computed on the basis of a 360-day year for the actual number of days in the
applicable period (“Actual/360 Computation”). The Actual/360 Computation
determines the annual effective interest yield by taking the stated (nominal)
rate for a year’s period and then dividing said rate by 360 to determine the
daily periodic rate to be applied for each day in the applicable period.
Application of the Actual/360 Computation produces an annualized effective rate
exceeding the nominal rate.

 

REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly
payments of accrued interest only, commencing on May 31, 2008, and continuing on
the last day of each month thereafter until fully paid. In any event, all
principal and accrued interest shall be due and payable on October 31, 2008.

 

AUTOMATIC DEBIT OF CHECKING ACCOUNT FOR LOAN PAYMENT. Borrower authorizes Bank
to debit demand deposit account number or any other account with Bank (routing
number) designated in writing by Borrower for any payments due under this Note.
Borrower further certifies that Borrower holds legitimate ownership of this
account and preauthorizes this periodic debit as part of its right under said
ownership.

 

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RENEWAL FEE. Borrower shall pay to Bank a renewal fee of $85,000.00 at closing
of this Note.

 

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a Default occurs, monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank.

 

If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.

 

DEFINITIONS. Loan Documents. The term “Loan Documents”, as used in this Note and
the other Loan Documents, refers to all documents executed in connection with or
related to the loan evidenced by this Note and any prior notes which evidence
all or any portion of the loan evidenced by this Note, and any letters of credit
issued pursuant to any loan agreement to which this Note is subject, any
applications for such letters of credit and any other documents executed in
connection therewith or related thereto, and may include, without limitation, a
commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements, security agreements, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. § 101, as in effect from time to time). Obligations.

 

The term “Obligations”, as used in this Note and the other Loan Documents,
refers to any and all indebtedness and other obligations under this Note, all
other obligations under any other Loan Document(s), and all obligations under
any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to
time) between Borrower and Bank, or its affiliates, whenever executed. Certain
Other Terms. All terms that are used but not otherwise defined in any of the
Loan Documents shall have the definitions provided in the Uniform Commercial
Code.

 

LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 15 or more days.
This late charge shall not apply to payments due at maturity or by acceleration
hereof, unless such late payment is in an amount not greater than the highest
periodic payment due hereunder.

 

Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank’s right to collect such late charge or to collect
a late charge for any subsequent late payment received.

 

ATTORNEYS’ FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank’s
reasonable expenses actually incurred to enforce or collect any of the
Obligations including, without limitation, reasonable arbitration, paralegals’,
attorneys’ and experts’ fees and expenses, whether incurred without the
commencement of a suit, in any trial, arbitration, or administrative proceeding,
or in any appellate or bankruptcy proceeding.

 

USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the

 

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maximum lawful rate, and any amount received by Bank in excess of such rate
shall be applied to principal and then to fees and expenses, or, if no such
amounts are owing, returned to Borrower.

 

DEFAULT. If any of the following occurs, a default (“Default”) under this Note
shall exist: Nonpayment; Nonperformance. The failure of timely payment or
performance of the Obligations or Default under this Note or any other Loan
Documents within ten (10) days of the due date thereof. False Warranty. A
warranty or representation made in the Loan Documents or furnished Bank in
connection with the loan evidenced by this Note proves materially false, or if
of a continuing nature, becomes materially false. Cessation; Bankruptcy. The
death of, appointment of a guardian for, dissolution of, termination of
existence of, loss of good standing status by, appointment of a receiver for,
assignment far the benefit of creditors of, or commencement of any bankruptcy or
insolvency proceeding by or against Borrower, its Subsidiaries or Affiliates, if
any, or any general partner of or the holder(s) of the majority ownership
interests of Borrower, or any party to the Loan Documents. Material Capital
Structure or Business Alteration. Without prior written consent of Bank, (i) a
material alteration in the kind or type of Borrower’s business or that of
Borrower’s Subsidiaries or Affiliates, if any; (ii) the sale of substantially
all of the business or assets of Borrower, any of Borrower’s Subsidiaries or
Affiliates or any guarantor, or a material portion (25% or more) of such
business or assets if such a sale is outside the ordinary course of business of
Borrower, or any of Borrower’s Subsidiaries or Affiliates or any guarantor, or
more than 50% of the outstanding stock or voting power of or in any such entity
in a single transaction or a series of transactions; (iii) the acquisition of
substantially all of the business or assets or more than 50% of the outstanding
stock or voting power of any other entity; or (iv) should any Borrower or any of
Borrower’s Subsidiaries or Affiliates or any guarantor enter into any merger or
consolidation. Material Adverse Change. Bank determines in good faith, in its
sole discretion, that the prospects for payment or performance of the
Obligations are impaired or there has occurred a material adverse change in the
business or prospects of Borrower, financial or otherwise.

 

REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions: Bank
Lien. Foreclose its security interest or lien against Borrower’s deposit
accounts and investment property with five (5) days written notice to Borrower.
Acceleration Upon Default. Accelerate the maturity of this Note and, at Bank’s
option, any or all other Obligations, other than Obligations under any swap
agreements (as defined in 11 U.S.C. § 101, as in effect from time to time)
between Borrower and Bank, or its affiliates, which shall be due in accordance

 

with and governed by the provisions of said swap agreements; whereupon this Note
and the accelerated Obligations shall be immediately due and payable; provided,
however, if the Default is based upon a bankruptcy or insolvency proceeding
commenced by or against Borrower or any guarantor or endorser of this Note, all
Obligations (other than Obligations under any swap agreement as referenced
above) shall automatically and immediately be due and payable. Cumulative.
Exercise any rights and remedies as provided under the Note and other Loan
Documents, or as provided by law or equity.

 

FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial

 

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statements and information pertaining to Borrower’s financial condition. Such
information shall be true, complete, and accurate.

 

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same Default on a future occasion. Neither the failure nor any
delay on the part of Bank in exercising any right, power, or remedy under this
Note and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.

 

Except to the extent otherwise provided by the Loan Documents or prohibited by
law, each Borrower and each other person liable under this Note waives
presentment, protest, notice of dishonor, demand for payment, notice of
intention to accelerate maturity, notice of acceleration of maturity, notice of
sale and all other notices of any kind. Further, each agrees that Bank may
(i) extend, modify or renew this Note or make a novation of the loan evidenced
by this Note, and/or (ii) grant releases, compromises or indulgences with
respect to any collateral securing this Note, or with respect to any Borrower or
other person liable under this Note or any other Loan Documents, all without
notice to or consent of each Borrower and other such person, and without
affecting the liability of each Borrower and other such person; provided, Bank
may not extend, modify or renew this Note or make a novation of the loan
evidenced by this Note without the consent of the Borrower, or if there is more
than one Borrower, without the consent of at least one Borrower, and further
provided, if there is more than one Borrower, Bank may not enter into a
modification of this Note which increases the burdens of a Borrower without the
consent of that Borrower.

 

MISCELLANEOUS PROVISIONS. Assignment. This Note and the other Loan Documents
shall inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank’s
interests in and rights under this Note and the other Loan Documents are freely
assignable, in whole or in part, by Bank. In addition, nothing in this Note or
any of the other Loan Documents shall prohibit Bank from pledging or assigning
this Note or any of the other Loan Documents or any interest therein to any
Federal Reserve Bank. Borrower shall not assign its rights and interest
hereunder without the prior written consent of Bank, and any attempt by Borrower
to assign without Bank’s prior written consent is null and void. Any assignment
shall not release Borrower from the Obligations. Applicable Law; Conflict
Between Documents. This Note and, unless otherwise provided in any other Loan
Document, the other Loan Documents shall be governed by and interpreted in
accordance with federal law and, except as preempted by federal law, the laws of
the state named in Bank’s address on the first page hereof without regard to
that state’s conflict of laws principles. If the terms of this Note should
conflict with the terms of any loan agreement or any commitment letter that
survives closing, the terms of this Note shall control. Borrower’s Accounts.
Except as prohibited by law, Borrower grants Bank a security interest in all of
Borrower’s deposit accounts and investment property with Bank and any of its
affiliates. Swap Agreements. All swap agreements (as defined in 11 U.S.C. § 101,
as in effect from time to time), if any, between Borrower and Bank or its
affiliates are independent agreements governed by the written provisions of said
swap agreements, which will remain in full force and effect, unaffected by any
repayment, prepayment, acceleration, reduction, increase or change in the terms
of this Note,

 

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except as otherwise expressly provided in said written swap agreements, and any
payoff statement from Bank relating to this Note shall not apply to said swap
agreements except as otherwise expressly provided in such payoff statement.
Jurisdiction. Borrower irrevocably agrees to non-exclusive personal jurisdiction
in the state named in the Bank’s address on the first page hereof. Severability.
If any provision of this Note or of the other Loan Documents shall be prohibited
or invalid under applicable law, such provision shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Note or other such
document. Payments. All payments if paid by check or other negotiable instrument
shall be mailed to Bank at Commercial Loan Services, P. 0. Box 740502, Atlanta,
GA 303740502; or other such address as provided by Bank in writing. Notices. Any
notices to Borrower shall be sufficiently given, if in writing and mailed or
delivered to the Borrower’s address shown above or such other address as
provided hereunder, and to Bank, if in writing and mailed or delivered to
Wachovia Bank, National Association, Mail Code VA7628, P. 0. Box 13327, Roanoke,
VA 24040 or Wachovia Bank, National Association, Mail Code VA7628, 10 South
Jefferson Street, Roanoke, VA 24011 or such other address as Bank may specify in
writing from time to time. Notices to Bank must include the mail code. In the
event that Borrower changes Borrowers address at any time prior to the date the
Obligations are paid in full, Borrower agrees to promptly give written notice of
said change of address by registered or certified mail, return receipt
requested, all charges prepaid. Plural; Captions. All references in the Loan
Documents to Borrower, guarantor, person, document or other nouns of reference
mean both the singular and plural form, as the case may be, and the term
“person”. shall mean any individual, person or entity. The captions contained in
the Loan Documents are inserted for convenience only and shall not affect the
meaning or interpretation of the Loan Documents. Advances. Bank may, in its sole
discretion, make other advances which shall be deemed to be advances under this
Note, even though the stated principal amount of this Note may be exceeded as a
result thereof. Posting of Payments. All payments by check or other negotiable
instrument, if any, received during normal banking hours after 2:00 p.m. local
time at the address for payments set forth above shall be deemed received at the
opening of the next banking day. Joint and Several Obligations. If there is more
than one Borrower, each is jointly and severally obligated together with all
other parties obligated for the Obligations. Fees and Taxes. Borrower shall
promptly pay all documentary, intangible recordation and/or similar taxes on
this transaction whether assessed at closing or arising from time to time.
LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO,
INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR
ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT
MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN
DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE
OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE
A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES
HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY
MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY SUCH
PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY ARBITRATION,
MEDIATION, JUDICIALLY OR OTHERWISE. Patriot Act Notice. To help fight the
funding

 

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of terrorism and money laundering activities, Federal law requires all financial
institutions to obtain, verify, and record information that identifies each
person who opens an account. For purposes of this section, account shall be
understood to include loan accounts. Final Agreement. This Note and the other
Loan Documents represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous or subsequent agreements of
the parties. There are no unwritten agreements between the parties.

 

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
BORROWER BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS NOTE, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED
IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT
HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS NOTE.
EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY
PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED
IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT

 

HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR BEING REPLACED,
SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS NOTE.

 

IN WITNESS WHEREOF, Borrower, on the day and year first above written, has
caused this Note to be duly executed under seal.

 

 

 

Force Protection, Inc.

 

 

 

 

 

 

 

 

By:

      /s/ Michael Moody

(SEAL)

 

 

Michael Moody, its Chief Executive Officer

 

 

 

 

Force Protection Technologies, Inc.

 

 

 

 

 

 

 

 

By

      /s/ Michael Moody

(SEAL)

 

 

Michael Moody, its Chief Executive Officer

 

 

 

 

Force Protection Industries, Inc.

 

 

 

 

 

 

 

 

By:

      /s/ Michael Moody

SEAL)

 

 

Michael Moody, its Chief Executive Officer

 

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