TWENTY-FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

Exhibit 10.1

This TWENTY-FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into as of this 29th day of January, 2010 by and among BANK OF AMERICA, N.A., as successor by merger to LaSalle Business Credit, LLC, 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 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000, PROTECTIVE APPAREL CORPORATION OF AMERICA, a New York corporation (“PACA”), POINT BLANK BODY ARMOR INC., a Delaware corporation (“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 amendments 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. Amendments.

(a) The definition of “Eligible Inventory” set forth in Section 1 of the Loan Agreement is hereby amended by replacing the period at the end of clause (ix) therein with “; and” and adding a new clause (x) at the end of such definition to read as follows:

“(x) it is not subject to any prepayment or progress billing arrangement as determined by Agent.

(b) The definition of “Sixteenth Amendment Reserve” set forth in Section 1 of the Loan Agreement is hereby amended and restated to read as follows:

“Sixteenth Amendment Reserve” means, for the relevant period, the dollar amount of the “Availability Block” set forth below for such period:

START DATE	END DATE	AVAILABILITY BLOCK
Sixteenth Amendment Effective Date	November 6, 2009	$7,500,000
November 7, 2009	November 13, 2009	$9,000,000
November 14, 2009	November 20, 2009	$10,500,000
November 21, 2009	December 4, 2009	$11,500,000
December 5, 2009	December 29, 2009	$7,750,000
December 30, 2009	January 6, 2010	$5,750,000 plus 85% of the amount of sales assigned to Agent between December 30, 2009 and January 6, 2010
January 7, 2010	January 17, 2010	$4,630,000 plus (a) 85% of the amount of sales assigned to Agent between January 7, 2010 and January 17, 2010; plus (b) 100% of the amount of any tax refund received in this period
January 18, 2010	January 28, 2010	$7,301,000
January 29, 2010	February 9, 2010	$2,000,000
February 10, 2010	April 4, 2010	$8,742,000

(c) Section 2(a)(i) of the Loan Agreement is hereby amended by reducing the advance rate against Borrowers’ Eligible Accounts set forth therein from “eighty-five percent (85%)” to “seventy-five percent (75%)”.

(d) Section 2(a)(ii) of the Loan Agreement is hereby amended and restated to read as follows:

“(ii) Up to the lesser of: (A) twenty percent (20%) of the Borrowers’ Eligible Inventory valued at cost (in accordance with the procedures described in Schedule 2(a)(ii)); or (B) $5,000,000 (such amount then applicable, the Inventory Advance Limit”); minus”

(e) The definition of “Maximum Revolving Loan Limit” set forth in Section 2(a) of the Loan Agreement is hereby amended by deleting the language reading “(B) during the period from December 19, 2009 through January 6, 2010, Twenty Million and No/100 Dollars ($20,000,000), (C) during the period from January 7, 2010 through January 17, 2010, Fifteen Million and No/100 Dollars ($15,000,000), (D) during the period from January 18, 2010 through January 22, 2010, Twenty Million and No/100 Dollars ($20,000,000), (E) during the period from January 23, 2010 through February 12, 2010, Fifteen Million and No/100 Dollars ($15,000,000), (F) during the period from February 13, 2010 through February 26, 2010, Ten Million and No/100 Dollars ($10,000,000) and (G) from and after February 27, 2010, Five Million and No/100 Dollars ($5,000,000)” and replacing it with the language reading:

“(B) during the period from December 19, 2009 through January 6, 2010, Twenty Million and No/100 Dollars ($20,000,000), (C) during the period from January 7, 2010 through January 17, 2010, Fifteen Million and No/100 Dollars ($15,000,000), (D) during the period from January 18, 2010 through January 22, 2010, Twenty Million and No/100 Dollars ($20,000,000), (E) during the period from January 23, 2010 through January 28, 2010, Fifteen Million and No/100 Dollars ($15,000,000), (F) during the period from January 29, 2010 through February 26, 2010, Ten Million and No/100 Dollars ($10,000,000) and (G) from and after February 27, 2010, Five Million and No/100 Dollars ($5,000,000)”

(f) Section 2(a) of the Loan Agreement is hereby amended by adding two new sentences to the end thereof to read as follows:

“The Agent, Lenders and Borrowers agree that upon the Agent’s receipt of (a) the Borrowers’ income tax refund in the approximate amount of $6,742,000 and (b) prepaid amounts under Borrowers’ government contracts after January 15, 2010 in the approximate amount of $4,321,000, Agent shall apply all such amounts in each case against the outstanding balance of Revolving Loans but, in the case of clause (b), such amounts shall not reduce the Revolving Loan Limit until such time as the inventory relating to such prepayments is shipped and billed at which time the applicable prepayment amount will then be applied against the account receivable relating to such Inventory for which the prepayment was received. The parties hereto agree that no Revolving Loans, Letters of Credit or other financial accommodations shall be made by Agent and Lenders or requested by Borrowers from and after such time when the aggregate combined amount of Revolving Loans, Letters of Credit and other financial accommodations made from and after January 28, 2010 equal (or would exceed after giving effect to such Revolving Loans, Letters of Credit and other financial accommodations requested by Borrowers) the amounts received by Agent under clauses (a) and (b) of the previous sentence (which amounts, for purposes of this limitation, shall not exceed the approximate amounts set forth in the previous sentence).”

(g) Section 12 of the Loan Agreement is hereby amended by adding a new subsection 12(p) to the end thereof to read as follows:

“(p) Cash Flow Projections. Borrowers shall have provided Agent with a 13 week cash flow projection on or prior to February 4, 2010 in a form acceptable to Agent.”

(h) Section 15(b)(i) of the Loan Agreement is hereby amended by adding a reference to “12(p)” immediately after reference to “12(o)” set forth therein.

(i) For purposes of clarification (i) with respect to that certain Eleventh Amendment to Loan And Security Agreement dated in May, 2009 among the parties hereto, the reference in Section 1(c) thereto to “new subsection 2(e)” shall be deemed a reference to “new subsection 2(f)” and (ii) with respect to that certain Fourteenth Amendment to Loan And Security Agreement dated in August, 2009 among the parties hereto, the reference in Section 1(b) thereto to “new subsection 2(f)” shall be deemed a reference to “new subsection 2(g)” and all references in any subsequent amendments to the Loan Agreement referring to either “Section 2(f)” or to “subsection (f)” of Section 2 to the Loan Agreement shall be deemed a reference to “Section 2(g)” or “subsection (g)” of Section 2 to the Loan Agreement, as applicable.

SECTION 2. Effectiveness. The effectiveness of this Amendment is subject to the satisfaction of each of the following conditions precedent:

(a) This Amendment shall have been duly executed and delivered by Borrowers and Parent (collectively, “Amendment Parties”), Agent and each Lender;

(b) No Default or Event of Default shall have occurred and be continuing after giving effect to this Amendment; and

SECTION 3. Representations and Warranties. In order to induce Agent and each Lender to enter into this Amendment, each Amendment Party hereby represents and warrants to Agent and each Lender, which representations and warranties shall survive the execution and delivery of this Amendment, that:

(a) all of the representations and warranties contained in the Loan Agreement and in each of the Other Agreements are true and correct in all material respects as of the date hereof after giving effect to this Amendment, except to the extent that any such representations and warranties expressly relate to an earlier date;

(b) the execution, delivery and performance by Amendment Parties of this Amendment has been duly authorized by all necessary corporate action required on their part and this Amendment, the Loan Agreement and the Other Agreements are the legal, valid and binding obligation of Amendment Parties enforceable against Amendment Parties in accordance with their terms, except as their enforceability may be affected by the effect of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the rights or remedies of creditors generally, and by general limitations on the availability of equitable remedies;

(c) neither the execution, delivery and performance of this Amendment by Amendment Parties, the performance by Amendment Parties of the Loan Agreement nor the consummation of the transactions contemplated hereby does or shall contravene, result in a breach of, or violate (i) any provision of any Amendment Party’s certificate or articles of incorporation or bylaws or other similar documents, or agreements, (iii) any law or regulation, or any order or decree of any court or government instrumentality, or (iii) any indenture, mortgage, deed of trust, lease, agreement or other instrument to which any Amendment Party or any of its Subsidiaries is a party or by which any Amendment Party or any of its Subsidiaries or any of their property is bound, except in any such case to the extent such conflict or breach has been waived or consented to herein or by a written waiver document, a copy of which has been delivered to Agent on or before the date hereof; and

(d) no Default or Event of Default has occurred and is continuing after giving effect to this Amendment.

SECTION 4. Reference to and Effect Upon the Loan Agreement.

(a) Except as specifically set forth above, the Loan Agreement and each of the Other Agreements shall remain in full force and effect and are hereby ratified and confirmed; and

(b) the amendments set forth herein are effective solely for the purposes set forth herein and shall be limited precisely as written, and shall not be deemed to (i) be a consent to any amendment, waiver or modification of any other term or condition of the Loan Agreement or any of the Other Agreements except as specifically set forth herein, (ii) operate as a waiver or otherwise prejudice any right, power or remedy that Agent or Lenders may now have or may have in the future under or in connection with the Loan Agreement or any of the Other Agreements except as specifically set forth herein, (iii) constitute a waiver of any provision of the Loan Agreement or any of the Other Agreements, except as specifically set forth herein, or (iv) constitute a waiver of any Event of Default existing on the date hereof or arising after the date hereof except as specifically set forth herein and Agent and Lenders hereby reserve all rights and remedies under the Loan Agreement and the Other Agreements as a result of such Events of Default. Upon the effectiveness of this Amendment, each reference in the Loan Agreement to “this Agreement”, “herein”, “hereof” and words of like import and each reference in the Loan Agreement and the Other Agreements to the Loan Agreement shall mean the Loan Agreement as amended hereby. This Amendment shall be construed in connection with and as part of the Loan Agreement. Each Amendment Party hereby acknowledges and agrees that there is no defense, setoff or counterclaim of any kind, nature or description to the Liabilities or the payment thereof when due.

SECTION 5. Costs And Expenses. To the extent provided in Section 4(c)(iv) of the Loan Agreement, Borrowers agree to reimburse Agent for all fees, costs, and expenses, including the reasonable fees, costs, and expenses of counsel or other advisors for advice, assistance, or other representation in connection with this Amendment.

SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

SECTION 7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute part of this Amendment for any other purposes.

SECTION 8. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original, but all such counterparts shall constitute one and the same instrument.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first written above.

BORROWERS:


PROTECTIVE APPAREL CORPORATION OF AMERICA

By:	/s/ Xxxxxxxx Xxxxx
Name:	Xxxxxxxx Xxxxx
Title:	Chief Financial Officer

POINT BLANK BODY ARMOR INC.

By:	/s/ Xxxxxxxx Xxxxx
Name:	Xxxxxxxx Xxxxx
Title:	Chief Financial Officer





PARENT:


POINT BLANK SOLUTIONS, INC.

By:	/s/ Xxxxxxxx Xxxxx
Name:	Xxxxxxxx Xxxxx
Title:	Chief Financial Officer

[Signature Page to Twenty-First Amendment to Loan and Security Agreement]

AGENT AND LENDER:

BANK OF AMERICA, N.A., as successor by merger to
LaSalle Business Credit, LLC



By:	/s/ Xxxxxxx X. Xxxxxxx
Name:	Xxxxxxx X. Xxxxxxx
Title:	Senior Vice President

[Signature Page to Twenty-First Amendment to Loan and Security Agreement]

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TWENTY-FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

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