Exhibit 10.2
FOURTH AMENDMENT TO LOAN AND
SECURITY AGREEMENT
This FOURTH
AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “
Amendment ”) is entered into as of this 11
th
day of August, 2008
by and among LASALLE BUSINESS CREDIT, LLC, a Delaware limited
liability company, successor by merger to LaSalle Business Credit,
Inc. (in its individual capacity, “ LaSalle ”),
as administrative agent and collateral agent (in such agent
capacities, “ Agent ”) for itself and all other
lenders from time to time a party hereto (“ Lenders
”), located at 135 South LaSalle Street, Chicago,
Illinois 60603-4105, PROTECTIVE APPAREL CORPORATION OF AMERICA, a
New York corporation (“ PACA ”), POINT BLANK
BODY ARMOR INC., a Delaware corporation (“ Point Blank
”) and LIFE WEAR TECHNOLOGIES, INC., a Florida corporation
(“ Life Wear ”, and together with PACA and Point
Blank, collectively, the “ Borrowers ” and each,
individually, a “ Borrower ”) and POINT BLANK
SOLUTIONS, INC., a Delaware corporation (the “ Parent
” and a “ Guarantor ”). Unless otherwise
specified herein, capitalized terms used in this Amendment shall
have the meanings ascribed to them by the Loan Agreement (as
hereinafter defined).
RECITALS
WHEREAS, Borrowers, Parent, Agent
and Lenders have entered into that certain Amended and Restated
Loan and Security Agreement dated as of April 3, 2007 (as
amended, supplemented, restated or otherwise modified from time to
time, the “ Loan Agreement ”);
WHEREAS, Borrowers, Parent, Agent
and Lenders have agreed to the amendment set forth
herein;
NOW THEREFORE, in consideration of
the foregoing recitals, mutual agreements contained herein and for
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrowers, Parent, Agent and Lenders
hereby agree as follows:
SECTION 1. Amendment to Loan
Agreement .
(a) Section 1 of the Loan
Agreement is hereby amended by adding the following new definitions
of “ Average Excess Availability ”, “
Dominion Account ”, “ Fixed Charge Coverage
Ratio ”, “ Quarterly Desk Top Appraisal
”, and “ Systems Day One ” in their proper
alphabetical places to read as follows:
“ Average Excess
Availability ” means for any calendar month, the average
daily amount of Availability for such month less the sum of
(x) the amount of all payables that are past due by more than
30 days as of the end of such month plus (y) the amount
of checks then outstanding as of the end of such month;
provided , that for purposes of calculating the Revolving
Loan Limit, the “Maximum Revolving Loan Limit” shall be
excluded from such calculation.
“ Dominion Account
” shall have the meaning specified in
subsection 8(a) hereof.
“ Fixed Charge Coverage
Ratio ” shall have the meaning specified in Schedule 2 to
Exhibit A hereto.
“Quarterly Desktop
Appraisal ” shall
mean, at any time, the then most recently completed quarterly
desktop evaluation and appraisal of Borrowers’ Inventory
completed by Appraiser in a manner acceptable to Agent and
substantially in the same form as the Quarterly Hilco
Report
“ Systems Day One
” shall mean the date upon which Agent’s system of
record for loans and deposits shall convert to the system of record
for loans and deposits used by Bank of America, N.A.
(b) Section 1 of the Loan
Agreement is hereby amended by amending and restating the
definition of “ Lock Box ” as
follows:
“ Lock Box ”
shall have the meaning specified in subsection 8(a)
hereof.
(c) Section 1 of the Loan
Agreement is hereby amended by amending and restating the
definition of “ Tangible Net Worth ” to read
“ Net Worth ” as follows:
“ Net Worth ”
shall have the meaning specified in Schedule 3 to Exhibit A
hereto.
(d) Section 1 of the Loan
Agreement is hereby amended by amending the definition of “
Financial Covenant Amendment ” by deleting the term
“Tangible Net Worth” contained therein and replacing it
with the term “Net Worth”.
(e) Section 8(a) of the Loan
Agreement is hereby amended and restated in its entirety to read as
follows:
“(a) Each Obligor shall direct
all of its Account Debtors to make all payments on the Accounts
directly to a post office box (the “ Lock Box ”)
designated by, and under the exclusive control of, Agent, at a
financial institution acceptable to Agent. Each Obligor has
established an account (the “ Dominion Account
”) in Agent’s name with a financial institution
acceptable to Agent, into which all payments received in the Lock
Box shall be deposited, and into which each Obligor will
immediately deposit all payments received by such Obligor on
Accounts in the identical form in which such payments were
received, whether by cash or check; provided that on or prior to
Systems Day One, at the request of Agent, the Dominion Account
shall be changed to each Obligor’s name for the benefit of
Agent. If any Obligor, any Affiliate or Subsidiary, any
shareholder, officer, director, employee or agent of any Obligor or
any Affiliate or Subsidiary, or any other Person acting for or in
concert with any Obligor shall receive any monies, checks, notes,
drafts or other payments relating to or as Proceeds of Accounts or
other Collateral, each Obligor and each such Person
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shall receive all such items in
trust for, and as the sole and exclusive property of, Agent and,
immediately upon receipt thereof, shall remit the same (or cause
the same to be remitted) in kind to the Dominion Account. The
financial institution with which the Dominion Account is
established shall acknowledge and agree, in a manner satisfactory
to Agent, that the amounts on deposit in such Lock Box and Dominion
Account are the sole and exclusive property of Agent, that such
financial institution will follow the instructions of Agent with
respect to disposition of funds in the Lock Box and Dominion
Account without further consent from any Obligor, that such
financial institution has no right to setoff against the Lock Box
or Dominion Account or against any other account maintained by such
financial institution into which the contents of the Lock Box or
Dominion Account are transferred, and that such financial
institution shall wire, or otherwise transfer in immediately
available funds to Agent in a manner satisfactory to Agent, funds
deposited in the Dominion Account on a daily basis as such funds
are collected. Each Obligor agrees that all payments made to such
Dominion Account or otherwise received by Agent, whether in respect
of the Accounts or as Proceeds of other Collateral or otherwise
(except for proceeds of Collateral which are required to be
delivered to the holder of a Permitted Lien which is prior in right
of payment), will be applied on account of the Liabilities in
accordance with the terms of this Agreement; provided, that
payments received by Agent shall be applied first to Prime Rate
Loans and then to LIBOR Rate Loans and so long as no Event of
Default exists, prepayments of LIBOR Rate Loans may, at the option
of Borrowers, be deposited into Borrowers’ operating account
in lieu of making a prepayment of LIBOR Rate Loans. Each Obligor
agrees to pay all customary fees, costs and expenses in connection
with opening and maintaining the Lock Box and Dominion Account. All
of such fees, costs and expenses if not paid by Obligors, may be
paid by Agent and in such event all amounts paid by Agent shall
constitute Liabilities hereunder, shall be payable to Agent by
Obligors upon demand, and, until paid, shall bear interest at the
highest rate then applicable to Loans hereunder. All checks,
drafts, instruments and other items of payment or Proceeds of
Collateral shall be endorsed by the applicable Obligor to Agent,
and, if that endorsement of any such item shall not be made for any
reason, Agent is hereby irrevocably authorized to endorse the same
on such Obligor’s behalf. For the purpose of this section,
each Obligor irrevocably hereby makes, constitutes and appoints
Agent (and all Persons designated by Agent for that purpose) as
such Obligor’s true and lawful attorney and agent-in-fact
(i) to endorse such Obligor’s name upon said items of
payment and/or Proceeds of Collateral
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and upon any Chattel Paper,
Document, Instrument, invoice or similar document or agreement
relating to any Account of such Obligor or Goods pertaining
thereto; (ii) to take control in any manner of any item of
payment or Proceeds thereof and (iii) to have access to any
lock box or postal box into which any of such Obligor’s mail
is deposited, and open and process all mail addressed to such
Obligor and deposited therein.”
(f) Section 8(b) of the Loan
Agreement is hereby deleted and replaced with the language
“(b) [Intentionally Omitted].”
(g) Section 8(d) of the Loan
Agreement is hereby amended and restated in its entirety to read as
follows:
“(d) Notwithstanding the
foregoing, on or after Systems Day One, for purposes of determining
the amount of Loans available for borrowing purposes, the ledger
balance in the main Dominion Account as of the end of a Business
Day shall be applied to the Liabilities at the beginning of the
next Business Day. However, solely for purposes of computing
interest hereunder, and in addition to Agent’s standard fees
and charges relating to the Dominion Account, any application by
Agent of such balance to the Liabilities shall be deemed to be made
on the same Business Day of application to the Liabilities. If, as
a result of such application, a credit balance exists, the balance
shall not accrue interest in favor of Borrowers and shall be made
available to Borrowers as long as no Event of Default exists.
Borrowers irrevocably waives the right to direct the application of
any payments or Collateral proceeds, and agrees that Agent shall
have the continuing, exclusive right to apply and reapply same
against the Liabilities, in such manner as Agent deems advisable,
notwithstanding any entry by Agent in its records.
(h) Section 9(b)(iii) of the
Loan Agreement is hereby amended and restated in its entirety to
read as follows:
“(iii) within thirty
(30) days after the end of each calendar month, unaudited
consolidated and consolidating monthly balance sheets, statements
of income, and shareholders’ equity and consolidated
statements of cash flows of Parent and its Subsidiaries as of the
last day of each such calendar month, all of which shall be
accompanied by a Compliance Certificate which shall include a
calculation of all financial covenants referenced therein that are
to be tested on a monthly basis per Section 14, as certified
in writing by the Chief Financial Officer of Parent (on behalf of
Parent and its Subsidiaries) as presenting fairly in all material
respects the financi
