Document:

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                                                                   EXHIBIT 10.26

          AMENDED AND RESTATED INTELLECTUAL PROPERTY SECURITY AGREEMENT

         This Amended and Restated Intellectual Property Security Agreement
(this "IP Agreement") is made as of the ____ day of January, 2004 by and between
ART TECHNOLOGY GROUP, INC., a Delaware corporation with its principal place of
business at 25 First Street, Cambridge, Massachusetts 02141("Grantor"), and
SILICON VALLEY BANK, a California-chartered bank, with its principal place of
business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan
production office located at One Newton Executive Park, Suite 200, 2221
Washington Street, Newton, Massachusetts 02462, doing business under the name
"Silicon Valley East" ("Lender").T his Amended and Restated Intellectual
Property Security Agreement amends and restates a certain Intellectual Property
Security Agreement dated as of June 13, 2002, by and between Grantor and Lender.

                                    RECITALS

         A.       Lender has agreed to make advances of money and to extend
certain financial accommodations to Grantor (the "Loan"), pursuant to a certain
Amended and Restated Loan and Security Agreement dated as of June 13, 2002,
between Grantor and Lender, as amended by a certain First Loan Modification
Agreement dated as of September 27, 2002, as further amended by a certain
Amendment dated as of October __, 2002, as further amended by a certain Second
Loan Modification Agreement dated as of December 24, 2002, as further amended by
a certain Third Loan Modification Agreement dated as of October 20, 2003, and as
further amended by a certain Fourth Loan Modification Agreement dated as of
November 26, 2003, as amended from time to time (as amended, the "Loan
Agreement"). The Loan is secured pursuant to the terms of the Loan Agreement.
Lender is willing to enter into certain financial accommodations with Grantor,
but only upon the condition, among others, that Grantor shall grant to Lender a
security interest in certain Copyrights, Trademarks, Patents, and Mask Works to
secure the obligations of Grantor under the Loan Agreement. Defined terms used
but not defined herein shall have the same meanings as in the Loan Agreement.

         B.       Pursuant to the terms of the Loan Agreement, Grantor has
granted to Lender a security interest in all of Grantor's right title and
interest, whether presently existing or hereafter acquired in, to and under all
of the Collateral (as defined therein).

         NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged and intending to be legally bound, as collateral security
for the prompt and complete payment when due of Grantor's Indebtedness (as
defined below), Grantor hereby represents, warrants, covenants and agrees as
follows:

         1.       Grant of Security Interest. As collateral security for the
prompt and complete payment and performance of all of Grantor's present or
future indebtedness, obligations and liabilities to Lender (hereinafter, the
"Indebtedness"), including, without limitation, under the Loan Agreement,
Grantor hereby grants a security interest in all of Grantor's right, title and
interest in, to and under its intellectual property collateral (all of which
shall collectively be called the "Intellectual Property Collateral"), including,
without limitation, the following:

                  (a)      Any and all copyright rights, copyright applications,
         copyright registrations and like protections in each work or authorship
         and derivative work thereof, whether published or unpublished and
         whether or not the same also constitutes a trade secret, now or
         hereafter existing, created, acquired or held, including without
         limitation those set forth on EXHIBIT A attached hereto (collectively,
         the "Copyrights");

                  (b)      Any and all trade secrets, and any and all
         intellectual property rights in computer software and computer software
         products now or hereafter existing, created, acquired or held;

                  (c)      Any and all design rights which may be available to
         Grantor now or hereafter existing, created, acquired or held;

                  (d)      All patents, patent applications and like protections
         including, without limitation, improvements, divisions, continuations,
         renewals, reissues, extensions and continuations-in-part of the same,
         including without limitation the patents and patent applications set
         forth on EXHIBIT B attached hereto (collectively, the "Patents");

<PAGE>

                  (e)      Any trademark and servicemark rights, whether
         registered or not, applications to register and registrations of the
         same and like protections, and the entire goodwill of the business of
         Grantor connected with and symbolized by such trademarks, including
         without limitation those set forth on EXHIBIT C attached hereto
         (collectively, the "Trademarks");

                  (f)      All mask works or similar rights available for the
         protection of semiconductor chips, now owned or hereafter acquired,
         including, without limitation those set forth on EXHIBIT D attached
         hereto (collectively, the "Mask Works");

                  (g)      Any and all claims for damages by way of past,
         present and future infringements of any of the rights included above,
         with the right, but not the obligation, to sue for and collect such
         damages for said use or infringement of the intellectual property
         rights identified above;

                  (h)      All licenses or other rights to use any of the
         Copyrights, Patents, Trademarks, or Mask Works and all license fees and
         royalties arising from such use to the extent permitted by such license
         or rights, including, without limitation those set forth on EXHIBIT E
         attached hereto (collectively, the "Licenses"); and

                  (i)      All amendments, extensions, renewals and extensions
         of any of the Copyrights, Trademarks, Patents, or Mask Works; and

                  (j)      All proceeds and products of the foregoing, including
         without limitation all payments under insurance or any indemnity or
         warranty payable in respect of any of the foregoing.

         2.       Authorization and Request. Grantor authorizes and requests
that the Register of Copyrights and the Commissioner of Patents and Trademarks
record this IP Agreement.

         3.       Covenants and Warranties. Grantor represents, warrants,
covenants and agrees as follows:

                  (a)      Grantor is now the sole owner of the Intellectual
         Property Collateral, except for non-exclusive licenses granted by
         Grantor to its customers in the ordinary course of business.

                  (b)      Performance of this IP Agreement does not conflict
         with or result in a breach of any IP Agreement to which Grantor is
         bound, except to the extent that certain intellectual property
         agreements prohibit the assignment of the rights thereunder to a third
         party without the licensor's or other party's consent and this IP
         Agreement constitutes a security interest.

                  (c)      During the term of this IP Agreement, Grantor will
         not transfer or otherwise encumber any interest in the Intellectual
         Property Collateral, except for non-exclusive licenses granted by
         Grantor in the ordinary course of business or as set forth in this IP
         Agreement;

                  (d)      To its knowledge, each of the Patents is valid and
         enforceable, and no part of the Intellectual Property Collateral has
         been judged invalid or unenforceable, in whole or in part, and no claim
         has been made that any part of the Intellectual Property Collateral
         violates the rights of any third party;

                  (e)      Grantor shall promptly advise Lender of any material
         adverse change in the composition of the Collateral, including but not
         limited to any subsequent ownership right of the Grantor in or to any
         Trademark, Patent, Copyright, or Mask Work specified in this IP
         Agreement;

                  (f)      Grantor shall (i) protect, defend and maintain the
         validity and enforceability of the Trademarks, Patents, Copyrights, and
         Mask Works, (ii) use its best efforts to detect infringements of the
         Trademarks, Patents, Copyrights, and Mask Works and promptly advise
         Lender in writing of material infringements detected and (iii) not
         allow any Trademarks, Patents, Copyrights, or Mask Works to be
         abandoned, forfeited or dedicated to the public without the written
         consent of Lender, which shall not be unreasonably withheld, unless
         Grantor determines that reasonable business practices suggest that
         abandonment is appropriate.

                                       -2-

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                  (g)      Grantor shall promptly register the most recent
         version of any of Grantor's Copyrights, if not so already registered,
         and shall, from time to time, execute and file such other instruments,
         and take such further actions as Lender may reasonably request from
         time to time to perfect or continue the perfection of Lender's interest
         in the Intellectual Property Collateral;

                  (h)      This IP Agreement creates, and in the case of after
         acquired Intellectual Property Collateral, this IP Agreement will
         create at the time Grantor first has rights in such after acquired
         Intellectual Property Collateral, in favor of Lender a valid and
         perfected first priority security interest in the Intellectual Property
         Collateral in the United States securing the payment and performance of
         the obligations evidenced by the Loan Agreement upon making the filings
         referred to in clause (i) below;

                  (i)      To its knowledge, except for, and upon, the filing
         with the United States Patent and Trademark office with respect to the
         Patents and Trademarks and the Register of Copyrights with respect to
         the Copyrights and Mask Works necessary to perfect the security
         interests created hereunder and except as has been already made or
         obtained, no authorization, approval or other action by, and no notice
         to or filing with, any U.S. governmental authority or U.S. regulatory
         body is required either (i) for the grant by Grantor of the security
         interest granted hereby or for the execution, delivery or performance
         of this IP Agreement by Grantor in the U.S. or (ii) for the perfection
         in the United States or the exercise by Lender of its rights and
         remedies thereunder;

                  (j)      All information heretofore, herein or hereafter
         supplied to Lender by or on behalf of Grantor with respect to the
         Intellectual Property Collateral is accurate and complete in all
         material respects.

                  (k)      Grantor shall not enter into any agreement that would
         materially impair or conflict with Grantor's obligations hereunder
         without Lender's prior written consent, which consent shall not be
         unreasonably withheld. Grantor shall not permit the inclusion in any
         material contract to which it becomes a party of any provisions that
         could or might in any way prevent the creation of a security interest
         in Grantor's rights and interest in any property included within the
         definition of the Intellectual Property Collateral acquired under such
         contracts, except that certain contracts may contain anti-assignment
         provisions that could in effect prohibit the creation of a security
         interest in such contracts.

                  (l)      Upon any executive officer of Grantor obtaining
         actual knowledge thereof, Grantor will promptly notify Lender in
         writing of any event that materially adversely affects the value of any
         material Intellectual Property Collateral, the ability of Grantor to
         dispose of any material Intellectual Property Collateral or the rights
         and remedies of Lender in relation thereto, including the levy of any
         legal process against any of the Intellectual Property Collateral.

         4.       Lender's Rights. Lender shall have the right, but not the
obligation, to take, at Grantor's sole expense, any actions that Grantor is
required under this IP Agreement to take but which Grantor fails to take, after
fifteen (15) days' notice to Grantor. Grantor shall reimburse and indemnify
Lender for all reasonable costs and reasonable expenses incurred in the
reasonable exercise of its rights under this section 4.

         5.       Inspection Rights. Grantor hereby grants to Lender and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Grantor, any of Grantor's plants
and facilities that manufacture, install or store products (or that have done so
during the prior six-month period) that are sold utilizing any of the
Intellectual Property Collateral, and to inspect the products and quality
control records relating thereto upon reasonable written notice to Grantor and
as often as may be reasonably requested, but not more than once in every six (6)
months; provided, however, nothing herein shall entitle Lender access to
Grantor's trade secrets and other proprietary information.

         6.       Further Assurances; Attorney in Fact.

                  (a)      On a continuing basis, Grantor will, subject to any
prior licenses, encumbrances and restrictions and prospective licenses, make,
execute, acknowledge and deliver, and file and record in the proper filing and
recording places in the United States, all such instruments, including
appropriate financing and continuation statements and collateral

                                       -3-

<PAGE>

agreements and filings with the United States Patent and Trademarks Office and
the Register of Copyrights, and take all such action as may reasonably be deemed
necessary or advisable, or as requested by Lender, to perfect Lender's security
interest in all Copyrights, Patents, Trademarks, and Mask Works and otherwise to
carry out the intent and purposes of this IP Agreement, or for assuring and
confirming to Lender the grant or perfection of a security interest in all
Intellectual Property Collateral.

                  (b)      Grantor hereby irrevocably appoints Lender as
Grantor's attorney-in-fact, with full authority in the place and stead of
Grantor and in the name of Grantor, Lender or otherwise, from time to time in
Lender's discretion, upon Grantor's failure or inability to do so, to take any
action and to execute any instrument which Lender may deem necessary or
advisable to accomplish the purposes of this IP Agreement, including:

                           (i)      To modify, in its sole discretion, this IP
         Agreement without first obtaining Grantor's approval of or signature to
         such modification by amending Exhibit A, Exhibit B, Exhibit C, and
         Exhibit D hereof, as appropriate, to include reference to any right,
         title or interest in any Copyrights, Patents, Trademarks or Mask Works
         acquired by Grantor after the execution hereof or to delete any
         reference to any right, title or interest in any Copyrights, Patents,
         Trademarks, or Mask Works in which Grantor no longer has or claims any
         right, title or interest; and

                           (ii)     To file, in its sole discretion, one or more
         financing or continuation statements and amendments thereto, relative
         to any of the Intellectual Property Collateral without the signature of
         Grantor where permitted by law.

         7.       Events of Default. The occurrence of any of the following
shall constitute an Event of Default under this IP Agreement:

                  (a)      An Event of Default occurs under the Loan Agreement;
         or any document from Grantor to Lender; or

                  (b)      Grantor breaches any warranty or agreement made by
         Grantor in this IP Agreement.

         8.       Remedies. Upon the occurrence and continuance of an Event of
Default, Lender shall have the right to exercise all the remedies of a secured
party under the Massachusetts Uniform Commercial Code, including without
limitation the right to require Grantor to assemble the Intellectual Property
Collateral and any tangible property in which Lender has a security interest and
to make it available to Lender at a place designated by Lender. Lender shall
have a nonexclusive, royalty free license to use the Copyrights, Patents,
Trademarks, and Mask Works to the extent reasonably necessary to permit Lender
to exercise its rights and remedies upon the occurrence of an Event of Default.
Grantor will pay any expenses (including reasonable attorney's fees) incurred by
Lender in connection with the exercise of any of Lender's rights hereunder,
including without limitation any expense incurred in disposing of the
Intellectual Property Collateral. All of Lender's rights and remedies with
respect to the Intellectual Property Collateral shall be cumulative.

         9.       Indemnity. Grantor agrees to defend, indemnify and hold
harmless Lender and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this IP Agreement, and
(b) all losses or expenses in any way suffered, incurred, or paid by Lender as a
result of or in any way arising out of, following or consequential to
transactions between Lender and Grantor, whether under this IP Agreement or
otherwise (including without limitation, reasonable attorneys fees and
reasonable expenses), except for losses arising from or out of Lender's gross
negligence or willful misconduct.

         10.      Reassignment. At such time as Grantor shall completely satisfy
all of the obligations secured hereunder, Lender shall execute and deliver to
Grantor all deeds, assignments, and other instruments as may be necessary or
proper to reinvest in Grantor full title to the property assigned hereunder,
subject to any disposition thereof which may have been made by Lender pursuant
hereto.

         11.      Course of Dealing. No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.

                                       -4-

<PAGE>

         12.      Attorneys' Fees. If any action relating to this IP Agreement
is brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys fees, costs and disbursements.

         13.      Amendments. This IP Agreement may be amended only by a written
instrument signed by both parties hereto.

         14.      Counterparts. This IP Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.

         15.      Law and Jurisdiction. This IP Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts.
GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT,
OR PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON LENDER CANNOT AVAIL ITSELF
OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETT S, GRANTOR ACCEPTS
JURISDICTION OF THE COURTS AND VENUE IN SANTA CLARA COUNTY, CALIFORNIA.

         GRANTOR AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

         16.      Confidentiality. In handling any confidential information,
Lender shall exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made: (i) to
Lender's subsidiaries or affiliates in connection with their present or
prospective business relations with Grantor; (ii) to prospective transferees or
purchasers of any interest in the Loans; (iii) as required by law, regulation,
subpoena, or other order, (iv) as required in connection with Lender's
examination or audit; and (v) as Lender considers appropriate in exercising
remedies under this Agreement. Confidential information does not include
information that either: (a) is in the public domain or in Lender's possession
when disclosed to Lender, or becomes part of the public domain after disclosure
to Lender; or (b) is disclosed to Lender by a third party, if Lender does not
know that the third party is prohibited from disclosing the information.

                                       -5-

<PAGE>

         EXECUTED as a sealed instrument under the laws of the Commonwealth of
Massachusetts on the day and year first written above.

ADDRESS OF GRANTOR:                            GRANTOR:

25 First Street, Cambridge, Massachusetts      ART TECHNOLOGY GROUP, INC.

                                               By:    /s/ Edward Terino
                                                     ---------------------------
                                               Name:  Edward Terino
                                                     ---------------------------
                                               Title: Chief Financial Officer
                                                     ---------------------------

                                       -6-

<PAGE>

         Exhibit "A" attached to that certain Amended and Restated Intellectual
Property Security Agreement dated ________________, 2004.

                                   EXHIBIT "A"

                                   COPYRIGHTS

                         SCHEDULE A - ISSUED COPYRIGHTS

COPYRIGHT                        REGISTRATION                      DATE OF
DESCRIPTION                         NUMBER                         ISSUANCE

                                      NONE

                  SCHEDULE B - PENDING COPYRIGHT APPLICATIONS

                                                                 FIRST DATE
COPYRIGHT         APPLICATION       DATE OF        DATE OF       OF PUBLIC
DESCRIPTION         NUMBER          FILING        CREATION      DISTRIBUTION

                                      NONE

            SCHEDULE C - UNREGISTERED COPYRIGHTS (Where No Copyright
                             Application is Pending)

<TABLE>
<CAPTION>
                                                       DATE AND RECORDATION NUMBER
                                                      OF IP AGREEMENT WITH OWNER OR
                                                              ORIGINAL
                                                             GRANTOR IF                 ORIGINAL AUTHOR
                                                            AUTHOR OR OWNER               OR OWNER OF
                                FIRST DATE                   OF COPYRIGHT                  COPYRIGHT IS
COPYRIGHT         DATE OF           OF                      IS DIFFERENT                 DIFFERENT ROM
DESCRIPTION      CREATION      DISTRIBUTION                 FROM GRANTOR                    GRANTOR
------------     --------      ------------                 ------------                    -------
<S>              <C>           <C>                    <C>                               <C>
</TABLE>

                              ALL DYN AMO VERSIONS

                                       -7-

<PAGE>

Exhibit "B" attached to that certain Amended and Restated Intellectual Property
Security Agreement dated _______________, 2004.

                                  EXHIBIT "B"

                                     PATENTS

PATENT
DESCRIPTION   DOCKET NO. COUNTRY      SERIAL NO.        FILING DATE STATUS

                                      NONE

                                       -8-

<PAGE>

Exhibit "C" attached to that certain Amended and Restated Intellectual Property
Security Agreement dated _________________, 2004.

                                  EXHIBIT "C"

                                   TRADEMARKS

TRADEMARK
DESCRIPTION       COUNTRY            SERIAL NO.           REG. NO         STATUS

                              SEE ATTACHED EXHIBIT

                                      -9-

<PAGE>

Exhibit "D" attached to that certain Amended and Restated Intellectual Property
Security Agreement dated _______2004.

                                   EXHIBIT "D"

                                   MASK WORKS

 MASK WORK
DESCRIPTION             COUNTRY        SERIAL NO.         REG. NO         STATUS

                                      NONE

                                      -10-

<PAGE>

Exhibit "E" attached to that certain Amended and Restated Intellectual Property
Security Agreement dated _____________, 2004.

                                   EXHIBIT "E"

                                    LICENSES

                              SEE ATTACHED EXHIBIT

                                      -11-<PAGE>

                                                                   EXHIBIT 10.9

                    SEPARATION AGREEMENT AND GENERAL RELEASE
                    ----------------------------------------

         SEPARATION AGREEMENT AND GENERAL RELEASE ("Agreement") made and
executed as of May 22, 2003 by and between Armor Holdings, Inc. (the "Company")
with offices at 1400 Marsh Landing Parkway, Jacksonville, Florida 32250, and
Jonathan M. Spiller ("Employee") residing at 611 Ponte Vedra Boulevard, Unit
113, Ponte Vedra Beach, Florida 32082.

                               W I T N E S S E T H

         WHEREAS, Employee was employed by the Company pursuant to an Employment
Agreement dated as of January 1, 2002 (the "Employment Agreement") through April
9, 2003 ("Termination Date"); and

         WHEREAS, the Company received Employee's resignation as a member of the
Company's Board of Directors on April 10, 2003; and

         WHEREAS, the parties desire to settle certain differences between them,
including, but not limited to, any differences that might arise or be related to
the Employment Agreement, the Employee's employment and the termination thereof.

         NOW, THEREFORE, in consideration of the premises and mutual promises
herein contained, it is agreed as follows:

         1. Termination of Employment Agreement. The parties acknowledge and
agree that this Agreement terminates and supercedes all of the provisions of the
Employment Agreement; provided, however, that the provisions of Sections 7
(Confidentiality), 8 (Non-competition) and 9 (Remedies) contained in the
Employment Agreement which, by reference thereto, are incorporated herein as
though fully set forth herein, shall survive the termination of the Employment
Agreement and remain binding on the Employee for the benefit of, and be
enforceable by, the Company; provided, however, that in consideration of the
Company's promises and covenants contained herein, including, without
limitation, the Settlement Benefits set forth in Section 4 hereof, the term of
the Employee's non-competition agreement under Section 8 of the Employment
Agreement shall continue for three years from the Termination Date.

         2. Employee's Representations. The Employee represents that he has not
filed any claims, complaints, charges or lawsuits (collectively "Actions")
against the Company and any parent, subsidiary and related corporations and
divisions of any of them, and the members, owners, stockholders, predecessors,
successors, assigns, agents, directors, officers, employees and representatives
of any of them with any governmental agency, arbitrator, or any court with
respect to his employment or separation from employment, and that he will not do
so at any time hereafter; provided, however, this clause shall not limit the
Employee from filing a lawsuit for the sole purpose of enforcing his rights
under this Agreement.

<PAGE>

         3. Acknowledgment of Payment and Receipt. The parties acknowledge that
all payments for wages and benefits due to the Employee, including payment for
four (4) weeks accrued vacation pay, have been paid by the Company and received
by the Employee, and that there are no further obligations of the Company to the
Employee except as specifically set forth in this Agreement.

         4. Payments and Benefits to Employee Not Required by Law or Contract.

         In full settlement of all Claims as hereinafter defined in Section 10.A
("Release of the Company"), and in consideration of the provisions contained in
Section 1 hereof, including, without limitation, confidentiality and
non-competition, the Company shall provide the following to the Employee
(hereinafter collectively referred to as "Settlement Benefits"):

               A. (i) Provided that Employee is not in breach of his
representations, warranties, covenants or obligations under this Agreement or
Sections 7, 8 and 9 of the Employment Agreement, as amended hereby, a severance
payment in the amount of $1,050,000, which shall be payable to Employee over a
period of two years commencing as of the Termination Date, payable, subject to
Section 13 hereof, in equal amounts in accordance with the Company's payroll
practices, and subject to withholding for applicable taxes and other amounts.

               (ii) Provided that Employee is not in breach of his
representations, warranties, covenants or obligations under this Agreement or
Sections 7, 8 and 9 of the Employment Agreement, as amended hereby, (x) on the
third anniversary of the date hereof, Employee shall be fully vested in and
receive the 100,000 share restricted stock grant described in Section 4(c)(iii)
of the Employment Agreement, (y) the vesting period for the restricted stock
grants for 4,916 shares which vest on December 31, 2003 and for 10,447 shares
which vest on December 31, 2004 shall be accelerated and fully vested as of the
date hereof, and (z) the termination date for the exercise of the following
options granted to Employee shall be extended to October 31, 2003:

               o    300,000 options granted under the 1998 Stock Option Plan
                    with an exercise price of $11.3125 per share;

               o    100,000 options granted under the 1996 Amended and Restated
                    Stock Option Plan with an exercise price of $10.4375 per
                    share;

               o    100,000 options granted under the 1996 Amended and Restated
                    Stock Option Plan with an exercise price of $11 per share;
                    and

               o    50,000 options granted under the 1996 Amended and Restated
                    Stock Option Plan with an exercise price of $12 per share.

                                       2
<PAGE>

All other options granted to Employee shall terminate on July 8, 2003 unless
sooner exercised by Employee. In the event that any of the 115,363 shares
described in clauses (x) and (y) of this Section 4.A(ii) are sold, liquidated or
converted due to a business combination or similar event, any proceeds thereof
shall be subject to the terms hereof.

               B. The Company shall respond to any request for a reference from
a prospective employer by providing a neutral reference consisting of only the
Employee's dates of employment and position.

         5. COBRA Rights. Employee, his current and any future spouse and his
two children have elected and will receive COBRA group medical coverage under
the Company's medical plans as and if in existence from time to time for a
period of 36 months from the date hereof; provided that such coverage shall
terminate on the date that Employee or his spouse at the time in question
becomes eligible for group health insurance coverage through new employment. The
Company shall pay the Employee's COBRA premium toward such coverage. Employee
acknowledges that the Company is satisfying more than its minimum statutory
COBRA obligations to Employee by providing the medical coverage described in
this Section 5, and that Employee is not entitled to any other rights with
respect to COBRA once the Company has satisfied its obligations under this
Section 5. For purposes of satisfying such statutory COBRA obligations, Employee
acknowledges that the Company began satisfying its obligations in respect of
COBRA on the Termination Date.

         6. No Re-Employment. The Employee acknowledges and agrees that the
Company and any of its subsidiaries, affiliates or related companies are under
no legal or contractual duty to re-employ, rehire or retain him in any capacity
and that he will not apply for re-employment with the Company or any of its
subsidiaries, affiliates or related companies in any capacity. Without limiting
the generality of the foregoing, Employee will not reapply and the Company and
its subsidiaries, affiliates or related companies will have no legal or
contractual duty to hire or retain the Employee in any capacity, whether as an
employee, consultant, independent contractor, distributor, broker, finder or in
any other commercial relationship.

         7. No Denigration. The Employee shall not denigrate or defame the
Company, its subsidiaries, affiliates and related companies, or cause any
negative publicity to be disseminated about the Company, its subsidiaries,
affiliates and related companies and their respective products and services
either orally or in writing. Without limiting the generality of the foregoing,
Employee shall not, without the Company's prior written consent, in any manner
disclose, divulge or discuss his tenure, relationship and performance with the
Company and its subsidiaries, affiliates or related companies; provided, that,
Employee shall be permitted to disclose the dates of his employment with the
Company, his position and responsibilities and, only in connection with
interviews for full-time employment, Employee shall be permitted to disclose
only facts that the Company has publicly disclosed.

         8. Confidentiality of Agreement.

               A. The Employee shall keep the terms and conditions of this
Agreement confidential except as may be required by law, and except that the
Employee may

                                       3
<PAGE>

discuss this Agreement with his attorney, if any, his accountant, financial
adviser or members of his immediate family residing with him, provided, in all
cases, each such person agrees to keep the information confidential and not to
disclose it to others. Employee recognizes that his breach of this
confidentiality provision would result in a material breach of this Agreement.
As it would be difficult to quantify the damages suffered by the Company from
such breach, in the event of such breach, the Employee agrees to pay to the
Company, as liquidated damages, an amount equal to the payments received
hereunder by the Employee.

               B. Employee shall be permitted to provide a copy of this
Agreement to Marilyn Spiller solely in connection with his pending divorce
proceedings provided that Marilyn Spiller signs a confidentiality agreement for
the benefit of the Company which is satisfactory to the Company. Employee agrees
that he will not, directly or indirectly, cause, induce or otherwise influence
Marilyn Spiller to breach her confidentiality obligations. Provided that
Employee is strictly in compliance with the foregoing, any breach by Marilyn
Spiller shall not be attributable to Employee.

               C. The Company shall keep the terms and conditions of this
Agreement confidential except as may be required by law, rule or regulation,
including the rules of a national securities exchange, except as is necessary or
desirable in connection with the operation of its business or its financial
disclosures and except as may be necessary in connection with any legal,
administrative or regulatory proceedings.

         9. Employee's Agreements and Representations:

               The Employee's right to receive the Settlement Benefits set forth
in Section 4 above are specifically contingent on the following agreements and
representations:

               A. The Employee agrees to refrain from making any use of the
Company e-mail and voice mail systems and acknowledges that the Company has
terminated his access to these systems.

               B. The Employee agrees that he will not attempt to gain access to
the Company offices or to contact Company employees, consultants, directors,
shareholders, customers, bankers and other parties that have direct or indirect
relationships with the Company, provided, however, that if the Employee has a
bona fide business reason to contact the Company or any related party, such
contact shall be made exclusively through the Company's Chief Operating Officer.
The provisions of this Section 9.B shall not restrict Employee from having
contact with those Company personnel with whom Employee has developed a personal
relationship, provided that such contact is purely social, no business directly
or indirectly relating to the Company is discussed, and Employee has provided
advance notice of such meeting to the Company's Chief Operating Officer.

               C. The Employee acknowledges and represents that he has no
Company property in his possession or control, nor has he disposed of any
Company property since the Termination Date.

                                       4
<PAGE>

               D. Without limiting the generality of Section 9.C hereof, the
Employee represents, warrants and covenants that he has returned all Company
credit cards, repaid all bonds, deposits and other amounts previously paid by or
posted by the Company for Employee's benefit (including the $100,000 bond at
Pablo Creek Club and the other items specified on Exhibit A attached hereto),
and returned all Company property. Subject to Section 13 hereof, the parties
hereto agree that Employee's payment obligation to the Company at signing shall
be netted against the Company's payment obligation to Employee under Section
4.A(i) hereof from the Termination Date to the date hereof. The Employee further
acknowledges that he is no longer eligible to receive any perquisites for his
benefit (including football tickets to the Jacksonville Jaguars), and that the
Company has terminated lease payments made by the Company in respect of any cars
used by Employee, including insurance and related car payments. The Employee
further represents and warrants that all charges for expense reimbursements
submitted by Employee and all charges paid by the Company on Employee's behalf
have been for valid and proper Company-related business expenses, and in the
event of any breach of this representation, the Company shall have the right,
among other things, to set-off the amount of any such improper charges against
the Company's payment obligations to Employee hereunder.

               E. The Employee hereby acknowledges and reaffirms the provisions
of Sections 7, 8 and 9 of the Employment Agreement, as amended hereby.

               F. The Employee represents that he has not violated the
Employment Agreement or any applicable laws, rules or regulations.

               G. The Employee acknowledges that he has no right, title or
interest in or to any intellectual property of the Company, including, but not
limited to, any patent, trademark, trade dress, service mark, copyright, design
or products and shall not assert any claim thereto.

               H. The Employee agrees that he will not solicit, encourage or
otherwise cause any employee or consultant of the Company to terminate his/her
employment or business affiliation with Company.

               I. The Employee will make himself available at the Company's
request as reasonably necessary to assist in transition and ongoing business
issues.

               J. The Employee agrees to assist the Company in connection with
any legal action, arbitration, administrative proceeding, investigation or other
action in which he may be requested to testify, consult or otherwise collaborate
with the Company, and in connection therewith, he will be compensated at the per
diem rate of $1,500 (or a pro-rata portion of such amount for any partial days),
plus reasonable expenses.

               K. The Employee agrees to provide a certificate, in the form
attached hereto as Exhibit B, to the Company on March 30 and September 30 of
each year, commencing September 30, 2003, and continuing through the third
anniversary of the date hereof, that he is in compliance with all of his
obligations under this Agreement, including, without limitation, his

                                       5
<PAGE>

non-competition obligations. In the event that such certificate is not provided
by the time specified, the Company shall provide written notice to Employee that
such notice is past due, and that such certificate must be provided to the
Company no later than 10 days from the original due date. For so long as the
Company has not received such certificate, the Company shall be relieved from
fulfilling any of its obligations under this Agreement including, without
limitation, making any Settlement Benefits available to Employee. In the event
that such certificate has not been received by the Company after expiration of
the extended time period provided herein, then Employee shall be in default of
his obligation hereunder. The Employee further represents and warrants that he
has been in such compliance with all of his obligations under this Agreement,
including, without limitation, his non-competition obligations, for the period
from the Termination Date to and including the date hereof.

         10. General Release.

               A. Release of the Company. In consideration of the Settlement
Benefits provided hereunder, and the covenants, obligations and undertakings of
the Company hereunder, the Employee irrevocably, unconditionally and generally
releases, acquits and forever discharges the Company, any related corporation,
entity and affiliate of each of the foregoing, and each of its members, owners,
stockholders, predecessors, successors, assigns, agents, directors, officers,
employees and representatives, and all persons acting by, through, under or in
concert with any of them (collectively "Releasees") from any and all claims,
charges, complaints, liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorneys' fees and costs actually
incurred) of any nature whatsoever (collectively, "Claims"), and arising out of
or relating to any matter or thing whatsoever including, but not limited to, any
and all Claims whatsoever arising from the Employment Agreement and the
Employee's employment with and termination from the Company (including without
limitation, wrongful discharge and breach of contract), any and all Claims
arising from federal, state or local statute or regulation (including without
limitation Title VII of the Civil Rights Act of 1964, as amended, Americans with
Disabilities Act, Age Discrimination in Employment Act, Family & Medical Leave
Act, Fair Labor Standards Act, state and local laws against discrimination,
state and local wage and hour and state and local labor laws), and any and all
Claims arising under common law, whether in contract or in tort. Excluded from
the scope of this Release of the Company are the Company's obligations under
this Agreement and the Company's indemnity obligations under the Delaware
General Corporation Law and the by-laws of the Company for the benefit of
officers and directors, provided that all applicable conditions to such
indemnification have been satisfied. The Company shall make available to
Employee any director and officer insurance policy coverage that had been
maintained during Employee's employment with the Company, provided Employee has
satisfied all coverage requirements.

               B. The scope of the release above given is from the beginning of
the world through the date of this Agreement and binds the Employee, his, heirs,
distributees, successors, assigns, estate and representatives.

         11. Complete Agreement, No Representations, No Modification. All prior
understandings between the parties are merged herein; no representations or
promises have been

                                       6
<PAGE>

made by either the Company or the Employee to the other unless set forth herein;
and any modification or termination of this Agreement must be in writing signed
by the party to be charged.

         12. Acknowledgment of Statutory Notice. The Employee acknowledges that
before execution of this Agreement, he received a copy of this Agreement with a
cover letter from the Company advising: (a) that he has the right, and is
encouraged, to consult an attorney with regard to this Agreement and (b) that he
had twenty-one (21) days to consider the Agreement and (c) that once the
Agreement was signed, he could revoke it during the immediate seven (7) days
following the signing of this Agreement. Employee acknowledges that he has been
represented by Cory E. Friedman, Esq., 123 East 75th Street, New York, New York
10021 and by the law firm of Cooper, Ridge & Lantinberg, P.A. with respect to
the negotiation and execution of this Agreement. The Employee further
acknowledges that notwithstanding his right to consider this Agreement for 21
days, if he has signed this Agreement sooner than the expiration of said 21
days, he has done so knowingly and voluntarily, and expressly waives his right
to consider this Agreement for the balance of the 21 days.

         13. Right to Revoke. This Agreement may be revoked by the Employee
within seven (7) days of its execution by written notice to the Company. In the
event that the Employee exercises his right to revoke this Agreement within such
7 day period, the entire Agreement including, without limitation, the Company's
obligation to pay the Settlement Benefits, shall be null and void. The
Employee's and the Company's payment obligations to each other at the signing of
this Agreement shall be deferred until the expiration of the seven (7) day
period referred to herein, and such payments shall be due and payable
immediately thereafter, provided that such period has expired and Employee has
not exercised such right of revocation.

         14. Counterpart Originals. This Agreement may be executed in identical
counterpart documents each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement. Facsimile signatures
shall be deemed acceptable and binding on the parties.

         15. Notice. Any demand, request or notice (collectively "Notice")
served pursuant to this Agreement must be written, and may be served personally,
or by certified mail, return receipt requested, on a party at the addresses set
forth in the opening paragraph of this Agreement, or such different address a
party may designate by Notice. Any Notice served upon the Company must be
directed to Robert R. Schiller, Chief Operating Officer, with a copy to Robert
L. Lawrence, Esq., Kane Kessler, P.C., 1350 Avenue of the Americas, New York,
New York 10019. Copies of Notices to Employee shall be directed to Employee at
the address set forth above, with a copy to Cory E. Friedman, Esq., 123 East
75th Street, New York, New York 10021 and to George E. Ridge, Esq., Cooper,
Ridge & Lantinberg, P.A., 1200 Suntrust Bank Building, 200 West Forsyth Street,
Jacksonville, Florida 32202.

         16. No Admission. This Agreement is entered into by the parties for
settlement purposes only and does not constitute an admission of wrongdoing of
any kind.

                                       7
<PAGE>

         17. Right of Set-Off and Liquidated Damages. In the event that Employee
breaches any representation, warranty, covenant or obligation contained in this
Agreement, or in the event that the Company in good faith and in its
commercially reasonable judgment believes that either (i) Employee has breached
any representation, warranty, covenant or obligation contained in this
Agreement, or (ii) during his tenure with the Company, Employee has conducted
himself in a manner that constituted a breach of his duties as President and
Chief Executive Officer of the Company, then (x) the Company's obligation to pay
or otherwise make any Settlement Benefit available to Employee shall terminate,
(y) because it would be difficult to quantify the damages suffered by the
Company from such breach or conduct, Employee agrees to pay to the Company, as
liquidated damages, an amount equal to the payments received hereunder by the
Employee, and (z) the Company's obligations under this Agreement shall terminate
but Employee's obligations under this Agreement shall remain in full force and
effect.

         18. Severability. In the event that any one or more of the provisions
contained in this Agreement shall be declared invalid, void or unenforceable,
the remainder of the provisions of this Agreement shall remain in full force and
effect, and such invalid, void or unenforceable provision shall be interpreted
as closely as possible to the manner in which it was written.

         19. Applicable Law. This Agreement has been negotiated in and shall be
deemed executed and delivered within the State of New York and is made in
contemplation of its interpretation and effect being construed in accordance
with the laws of the State of New York, applicable to contracts fully executed,
delivered and performed in the State of New York, and it is expressly agreed
that it shall be construed in accordance with the laws of the State of New York
without giving effect to the principles of its conflicts of laws rules. All
litigation arising out of or relating to this Agreement or any of the
transactions contemplated hereby shall be brought exclusively in the Federal or
State courts of the State of New York, County of New York, and the parties
consent to personal jurisdiction therein, and further consent to service by
certified mail, return receipt requested.

         20. Headings, etc. The headings and captions contained in this
Agreement are for convenience of reference only and in no way define, limit or
describe the scope or intent of this Agreement or in any way affect this
Agreement. Unless the context otherwise specifically requires, words importing
the singular include the plural and vice-versa. The terms "hereunder", "hereto",
"herein" and similar terms relate to this entire Agreement not to any particular
paragraph or provision of this Agreement.

         21. Entire Agreement. This Agreement, including the terms of the
Employment Agreement specifically incorporated herein by reference, contains
every obligation and understanding between the parties relating to the subject
matter hereof and merges all prior discussions, negotiations and agreements
between them. None of the parties shall be bound by any agreements, covenants,
conditions, definitions, understandings, warranties or representations other
than as expressly provided or referred to herein.

         22. Knowing and Voluntary Agreement. This Agreement has been entered
into after negotiation and review of its terms and conditions by parties under
no compulsion to

                                       8
<PAGE>

execute and deliver a disadvantageous agreement. No ambiguity or omission in
this Agreement shall be construed or resolved against any party on the ground
that this Agreement or any of its provisions was drafted or proposed by that
party. Employee acknowledges that he has been represented by counsel in the
negotiation of this Agreement.

         IN WITNESS WHEREOF, the parties have made and executed this Agreement
on the date first set forth above.

                                           ARMOR HOLDINGS, INC.

                                           By: /s/ Robert R. Schiller
                                              ----------------------------------
                                              Name:  Robert R. Schiller
                                              Title: COO and CFO

                                           /s/ Jonathan M. Spiller
                                           -------------------------------------
                                           Jonathan M. Spiller

                                        9
<PAGE>

                                    Exhibit A

            Pablo Creek Club Bond                       $100,000.00
            Hunting Trip - Spain                           5,365.35
            2003 Season - Jaguars Football
            Tickets (2) Club Seats (100 FF 1-2)
                    (1) Lot J Parking Pass                 6,726.18
            Total:                                      $112,091.53

<PAGE>

                                    Exhibit B
                                    ---------

                             Compliance Certificate
                             ----------------------

         I, Jonathan M. Spiller, hereby certify to Armor Holdings, Inc. pursuant
to Section 9.K of that certain Separation Agreement and General Release, dated
as of May __, 2003 (the "Agreement"), that I am in compliance with all of my
obligations under the Agreement, including, without limitation, my
non-competition obligations.

                  IN WITNESS WHEREOF, I have executed this Compliance
Certificate on                  , 200 .
               -----------------     -

                                             --------------------------
                                                 Jonathan M. Spiller

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