EXHIBIT 10.19
EXECUTION COPY
EIGHTH AMENDMENT AND WAIVER (this "AMENDMENT"), dated as of
November 3,
2005, to LOAN AND SECURITY AGREEMENT, dated as of September 24, 2001 (as
amended, modified or supplemented from time
to time, the "LOAN AGREEMENT"), by
and among LASALLE BUSINESS CREDIT,
LLC, a Delaware
limited liability
company,
successor by merger to LASALLE BUSINESS CREDIT, INC., a Delaware corporation
("LASALLE"), and PROTECTIVE APPAREL CORPORATION OF AMERICA, a New York
corporation ("PACA"), POINT BLANK BODY ARMOR, INC., a Delaware corporation
("POINT BLANK"), and NDL PRODUCTS,
INC., a Florida
corporation ("NDL", and with
PACA and Point Blank, collectively, the
"Borrowers" and each, a "BORROWER"), and
DHB INDUSTRIES, INC., a Delaware
corporation (f/k/a DHB Capital Group, Inc., the
"PARENT"). Terms which are capitalized in this Amendment and not otherwise
defined herein shall have the meanings ascribed to such terms in the Loan
Agreement.
WHEREAS, the Borrowers and Parent have requested that LaSalle (i)
agree
to the modification of certain terms and provisions contained in the Loan
Agreement, (ii) waive certain covenant
violations as Events of Default under the
Loan Agreement and (iii) permit the proceeds of
Revolving Loans to be
used to
purchase outstanding shares of common stock
of the Parent; and
WHEREAS, LaSalle
has consented to such request, on the terms and
subject to the satisfaction of the
conditions contained in this Amendment.
NOW, THEREFORE, in
consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby
agree as follows:
SECTION ONE.
AMENDMENTS.
Effective upon the satisfaction of the
conditions set forth in Section Four
hereof, the Loan
Agreement shall be and is
hereby amended as follows:
(A) SECTION 1. DEFINITIONS.
(i) The following new
definitions
are inserted into
Section
1 of the Loan Agreement in alphabetical
order:
"Non-Cash Compensation Charge" shall mean the non-cash expense
incurred by Parent and the Borrowers in the aggregate amount
of $11,300,000 relating to the compensation of certain key
employees, officers or directors of Parent and the Borrowers
in the form of distributions to such persons of options to
purchase shares of capital stock in Parent.
"Treasury Stock Buyback" shall mean the purchase in the open
market by Parent, in cash, of up to three million (3,000,000)
shares of common stock of Parent, which stock, when so
repurchased, shall be accounted for on the Parent's balance
sheet as a reduction in the aggregate amount of outstanding
shares of common stock of Parent and a corresponding decrease
in paid-in-capital of Parent.
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"Zylon Charge" shall mean (i) a write-off of "Zylon" inventory
in the aggregate amount of Twenty Million Dollars
($20,000,000) on the consolidated balance sheet of Parent and
the Borrowers (the "Zylon Inventory") and (ii) the
establishment of a $40,000,000 reserve account on the
consolidated balance sheet of Parent and the Borrowers
corresponding to the anticipated costs and expenses to be
incurred by Parent and the Borrowers in replacing the Zylon
Inventory.
(B) SECTION 2. LOANS.
(i) The first sentence of Section 2(d)(ii) of the Loan
Agreement is deleted in its entirety and the
following is substituted in lieu
thereof:
""REPAYMENT OF TERM LOAN. The Term Loan shall be
repaid as follows: (a) beginning on and including July 1,
2004, in consecutive quarterly installments, each in the
amount of One Million and No/100 Dollars ($1,000,000) and each
payable on the first day of each quarter; (b) beginning on and
including July 1, 2005, in consecutive quarterly installments,
each in the amount of Two Million and No/100 Dollars
($2,000,000) and each payable on the first day of each
quarter; and (c) beginning on and including January 1, 2006,
in consecutive quarterly installments, each in the amount of
Three Million and No/100 Dollars ($3,000,000) and each payable
on the first day of each quarter; provided, that the entire
outstanding principal balance of the Term Loan shall be repaid
on the earliest to occur of: (i) the last day of the Original
Term; (ii) the date of termination of this Agreement pursuant
to Section 10 hereof; (iii) the date on which the due date of
the Liabilities is accelerated pursuant to Section 16 hereof;
or (iv) the date any mandatory prepayment thereof shall be
required pursuant to Section 2(d)(iv) hereof."
(C) SECTION 4. INTEREST, FEES AND CHARGES.
(i) Clause (b) of Section 4(a)(i) is deleted in its
entirety
and the following is substituted in lieu
thereof:
"(b) from and after November 1, 2005, portions of the
Term Loan borrowed as Prime Rate Loans shall bear interest at
the Prime Rate in effect from time to time, and"
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(ii) Clause (b) of Section 4(a)(ii) is deleted in its entirety
and the following is substituted in lieu
thereof:
"(b) from and after November 1, 2005, portions of the
Term Loan borrowed as LIBOR Rate Loans shall bear interest at
one and three-quarters percent (1.75%) in excess of the LIBOR
Rate for the applicable Interest Period and"
(D) SECTION 14. FINANCIAL COVENANTS. Clauses (a)(i), (a)(ii), (b) and
(c) of Section 14 of the Loan Agreement are deleted in their entirety and the
following are substituted in lieu
thereof:
"(A)
TANGIBLE NET WORTH.
(i) The Tangible Net Worth of Parent and its
Subsidiaries, on a consolidated basis, shall not at
any time be less than Forty-Five Million and No/100
Dollars ($45,000,000); provided, however, that solely
for purposes of calculating such Tangible Net Worth,
the amount of each of the Zylon Charge, the Non-Cash
Compensation Charge and the Treasury Stock Buyback
shall each be excluded.
(ii) Each Borrower shall at all times maintain a
minimum Tangible Net Worth of at least One Dollar.
(B) FIXED
CHARGE COVERAGE.
Parent and the Borrowers shall not permit the ratio
of EBITDA to Fixed Charges for any fiscal quarter
(determined as of the end of such fiscal quarter),
commencing with the fiscal quarter ending on or about
March 31, 2004, in each case together with the
immediately preceding three fiscal quarters, to be
less than 2.00 : 1.00; provided, however, that solely
for purposes of calculating compliance with this
covenant as to any test period, no effect shall be
given to the Zylon Charge, the Non-Cash Compensation
Charge and the Treasury Stock Buyback.
(C)
CONSOLIDATED EBITDA.
Parent and the Borrowers shall not permit EBITDA for
any fiscal quarter (determined as of the end of such
fiscal quarter), commencing with the fiscal quarter
ending on or about March 31, 2004, to be less than
Four Million Five Hundred Thousand and No/100 Dollars
($4,500,000); provided, however, that solely for
purposes of calculating compliance with this covenant
as to any test period, no effect shall be given to
the Zylon Charge, the Non-Cash Compensation Charge
and the Treasury Stock Buyback."
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<PAGE>
SECTION TWO. WAIVER.
Parent and the
Borrowers have
notified LaSalle
that after giving effect to the Zylon Charge and the Non-Cash Compensation
Charge, Parent and its Subsidiaries are
not and will not be in compliance with:
(a) the minimum Tangible Net Worth covenant set forth in Section
14(a) of the
Loan Agreement; (b) the required ratio of EBITDA
to Fixed Charges set forth in
Section 14(b) of the Loan Agreement for the p
