Exhibit 10.1
FIRST AMENDING
AGREEMENT
TO THE PROTECTIVE PRODUCTS OF AMERICA,
INC.
FORBEARANCE AGREEMENT
DATED AS OF JANUARY 30,
2009
THIS FIRST AMENDING
AGREEMENT is made effective as
of June 30, 2009,
BETWEEN:
PROTECTIVE PRODUCTS OF AMERICA,
INC.
(the "
Borrower ")
- and -
CANADIAN IMPERIAL BANK OF
COMMERCE
(" CIBC ",
in its capacity as Agent and Lender)
PREAMBLE
:
A.
Pursuant to a Forbearance Agreement dated
as of January 30, 2009 between the Borrower and CIBC (the "
Forbearance Agreement "), CIBC agreed to forbear from
exercising any of its " Remedies " (as defined in the
Forbearance Agreement) under the credit agreement dated as of
September 21, 2004, as amended, between the Borrower (formerly
Ceramic Protection Corporation) and CIBC and as amended and
restated pursuant to an amended and restated credit agreement dated
as of January 30, 2009, as the same may be further amended,
supplemented, restated, replaced or otherwise modified from time to
time, collectively, the " Credit Agreement ") until the
earlier of (i) June 30, 2009 and (ii) the occurrence of a "
Termination Event " (as defined in the Forbearance
Agreement).
B.
CIBC has agreed to, inter alia ,
extend the " Forbearance Period " (as defined in the
Forbearance Agreement) and to provide a Temporary Bulge (as
hereinafter defined) to the Revolving Loan on the terms and
conditions provided for herein and the parties have agreed to amend
the Forbearance Agreement on the terms and conditions herein
provided.
AGREEMENT
:
In consideration of the premises, the
covenants and the agreements herein contained and for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged between the parties, the parties hereto agree
as follows:
1.
Definitions
. Capitalized terms used in this
First Amending Agreement will, unless otherwise defined herein,
have the meanings attributed to such terms in the Credit
Agreement.
2.
Acknowledgements and
Confirmations . The
Borrower on behalf of itself and each Material Subsidiary hereby
acknowledges, agrees and confirms to CIBC as follows:
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(i)
As of June 25, 2009, the Borrower is
indebted to CIBC under the Credit Agreement in the principal amount
of U.S. $5,867,714.48, together with any accrued and unpaid
interest thereon, plus all fees, service charges, legal fees and
expenses and other costs, and the Borrower affirms its absolute and
unconditional obligation and promise to repay the "
Obligations " (as defined in the Forbearance Agreement) to
CIBC in accordance with the terms of the Credit Agreement and the
Forbearance Agreement, as amended hereby;
(ii)
The " Existing Defaults "
(as defined in the Forbearance Agreement, as amended hereby) have
occurred and are continuing under the Credit Agreement, and,
subject to the terms and conditions of this Forbearance Agreement,
as amended hereby, CIBC is entitled to immediately exercise its
Remedies;
(iii)
All existing Security given to CIBC
(including the additional security Documents delivered pursuant to
Section 7 of the Forbearance Agreement) is binding upon the
Borrower and the Material Subsidiaries, and are valid and
enforceable according to its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, or similar statutes affecting the enforcement of
creditors' rights generally and by general principles of
equity;
(iv)
Subject to the Forbearance Agreement, as
amended hereby, CIBC has the right to terminate any further
obligation to make Advances under the Credit Agreement and demand
immediate repayment of the Obligations and CIBC has no obligation
to make any further Advances under the Credit Agreement;
and
(v)
All obligations of the Borrower and each
Material Subsidiary under the Forbearance Agreement, as amended by
this First Amending Agreement, including, without limitation, the
obligations of the Borrower with respect to the Temporary Bulge of
the Revolving Loan established hereunder, are secured by the
Security and guaranteed under the guarantees previously delivered
by each Material Subsidiary.
3.
Credit Agreement Temporary
Bulge . Subject to
the terms and conditions of this First Amending Agreement, CIBC hereby agrees to provide to the Borrower
an Advance under the Revolving Loan in the form of a temporary
increase to the Revolving Loan by way of a one-time draw down in
the maximum amount of U.S. $650, 000
(the " Temporary Bulge "). The Temporary Bulge is
deemed to form part of the Revolving Loan and shall bear interest
at the rates set forth in the Credit Agreement for U.S. Base Rate
Loans. Notwithstanding anything to the contrary in the Credit
Agreement, any prepayment or repayment by the Borrower of any
amount outstanding under the Credit Agreement shall be to first
repay principal outstanding under the Temporary Bulge. CIBC
shall not be obligated to re-advance any amounts of the Temporary Bulge that have been
repaid. The Temporary Bulge will be made available to the Borrower
by one-time drawdown of the Revolving Loan provided a notice of
borrowing, in form and substance satisfactory to CIBC (including a
Notice of Borrowing with such amendments satisfactory to CIBC), is
received from the Borrower by CIBC in accordance with the terms and
conditions of the Credit Agreement.
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4.
Amendments
. Subject to completion of the
deliveries set out in Section 6 below, the Forbearance Agreement is
amended as follows:
(a)
The reference to "June 30, 2009" in
Section 3(a)(i) of the Forbearance Agreement is hereby deleted and
replaced with "October 31, 2009";
(b)
Clause (ii) of Section 3(b) of the
Forbearance Agreement is hereby amended by deleting the reference
to "Section 10.2(a) or (b) of the Credit Agreement as of the fiscal
quarter ending March 31, 2009 and June 30, 2009" and replace such
reference with "Sections 10.2(a) or (b) of the Credit Agreement as
of the fiscal quarters ending March 31, 2009, June 30, 2009 and
September 30, 2009";
(c)
Section 4(b) of the Forbearance Agreement
is hereby amended to add the following parenthetical to the end of
such section:
"(other than the failure of the Borrower
or any Material Subsidiary to comply with Section 7(g) hereof;
provided that such failure of the Borrower or any Material
Subsidiary to comply with Section 7(g) shall only be until the
earlier of (i) the occurrence of any other Termination Event, and
(ii) expiry of the Forbearance Period)";
(d)
The last sentence of Section 4(c)
of the Forbearance Agreement is hereby deleted in its
entirety;
(e)
Section 7(b) of the Forbearance Agreement
is hereby deleted in its entirety and replaced with the
following:
"(b)
on Borrower's receipt of its income tax
refund for the year ended December 31, 2006 from the United States
Department of Treasury in connection with the Borrower's 2006 form
1120X filings (the " 2006 Income Tax Refund "):
(i)
within five Business Days, the Borrower
shall (A) provide to CIBC a Borrowing Base Certificate, (B) pay the
Amendment Fee, and (C) permanently repay (I) the Temporary Bulge
and (II) the difference between the amount by which the Aggregate
Principal Amount exceeds the Borrowing Base; and
(ii)
within ten Business Days, the Borrower
shall (A) deliver updated Cash Projections to CIBC, and (B) repay
to CIBC an amount equal to (I) (x) the aggregate amount of the 2006
Income Tax Refund minus (y) the amount paid to CIBC pursuant to
Section 7(b)(i), (II) multiplied by 0.5, unless the Borrower and
CIBC mutually agree to such other proportion of the remainder of
the 2006 Income Tax Refund to be owing to CIBC.
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(f)
The reference to "June 30, 2009" in
Section 7(c) of the Forbearance Agreement is hereby deleted and
replaced with "October 31, 2009";
(g)
Section 7(h) of the Forbearance Agreement
is hereby amended by adding "or interest" immediately after the
word "principal" in the second line thereof;
(h)
Section 7(i) of the Forbearance Agreement
is hereby amended by (i) deleting the reference to "March 31, 2009"
and replacing it with "July 15, 2009" and (ii) deleting the
reference to "the Projections for the Borrower and each Material
Subsidiary provided to CIBC in November, 2008";
(i)
Section 7(k) of the Forbearance Agreement
is hereby amended by deleting the reference to "April 30, 2009" and
replacing it with "September 30, 2009";
(j)
Section 7(n) of the Forbearance Agreement
is hereby amended by deleting the reference to "." and replacing it
with "; and";
(k)
A Section 7(o) is hereby added to the
Forbearance Agreement as follows:
"(o) the Borrower shall, every Friday
before 4:00 p.m. EST, deliver to CIBC by facsimile or other
electronic transmission setting a detailed list of the cash on
deposit as of such day in each account at each financial
institution at which the Borrower and each Material Subsidiary has
deposit accounts, including, without limitation:
(i)
Protective Products International Corp.'s
cash on deposit in account no. 2710003307 established at Northern
Trust, NA;
(ii)
CPC Holdings Corporation of America's
cash on deposit in account no. 1284042454 established at Northern
Trust, NA; and
(iii)
each additional bank account of the
Borrower or any Material Subsidiary that may be opened or
established from time to time.
(l)
Schedule "A" to the Forbearance Agreement
is hereby deleted and replaced with the attached as Schedule
"A" hereto; and
(m)
Schedule "B" to the Forbearance Agreement
is hereby deleted and replaced with the projections attached as
Schedule "B" hereto.
5.
First Amending Agreement
Fee . The Borrower
shall pay to CIBC a first amending agreement fee of U.S. $50,000.00
(the " Amendment Fee "), which shall be fully earned
on the execution and delivery of this First Amending Agreement and
paid to CIBC on the earlier of: (i) 5 Business Days after receipt
by the Borrower of the 2006 Income Tax Refund; and (ii) October 31,
2009. The Amendment Fee shall constitute Indebtedness of the
Borrower under the Credit Agreement.
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6.
Deliveries by the
Borrower . The
Borrower shall deliver or cause to be delivered to CIBC the
following items, and this First Amending Agreement will only become
effective upon the receipt thereof by CIBC:
(a)
a fully executed copy of this First
Amending Agreement;
(b)
a Compliance Certificate dated as of the
date hereof;
(c)
a Borrowing Base Certificate dated as of
the date hereof;
(d)
all invoiced amounts payable pursuant to
Section 7(f) of the Forbearance Agreement, as amended by this First
Amending Agreement; and
(e)
such other documents as CIBC may
reasonably request.
7.
Representations and
Warranties . The
Borrower and each of the Material Subsidiaries represents and
warrants to CIBC as follows:
(a)
The Borrower and each Material Subsidiary
has the power and authority and all government licenses,
authorizations, consents, registrations and approvals required to
own its assets, to conduct the business in which it is engaged and
to enter into and perform its obligations under the Forbearance
Agreement, as amended hereby, the Credit Agreement and the
Documents;
(b)
This First Amending Agreement has been
duly authorized, executed and delivered by the Borrower and each
Material Subsidiary and does not contravene any law, rule or
regulation applicable to the Borrower or any Material Subsidiary or
any of its charter documents, by-laws or other governing document
or any indenture, agreement or undertaking to which the Borrower or
any Material Subsidiary is a party;
(c)
The obligations of the Borrower and each
Material Subsidiary under the Forbearance Agreement, as amended
hereby, the Credit Agreement and the Documents constitute legal,
valid and binding obligations of the Borrower and such Material
Subsidiary enforceable in accordance with their terms, except to
the extent that enforceability may be limited by applicable
bankruptcy, insolven
