EX-10.1.14






Exhibit 10.1.14




FORBEARANCE AGREEMENT




     THIS AGREEMENT is made effective as of January 30, 2009



BETWEEN:




PROTECTIVE PRODUCTS OF AMERICA, INC.

(the “Borrower”)




- and -




CANADIAN IMPERIAL BANK OF COMMERCE

(“CIBC”, in its capacity as Agent and Lender)




RECITALS:





A. Pursuant to a credit agreement dated as of September 21, 2004 between the Borrower (formerly
Ceramic Protection Corporation) and CIBC, (as amended from time to time, and as amended and
restated as of the date hereof as contemplated by Section 5 below, as the same may be further
amended, supplemented, restated, replaced or otherwise modified from time to time, collectively,
the “Credit Agreement”), CIBC agreed to provide certain credit facilities to the Borrower;




B. To secure the obligations of the Borrower under the Credit Agreement, the Borrower and each
Material Subsidiary provided certain security in favour of CIBC, including, without limitation,
guarantees from each Material Subsidiary (the “Security”);




C. The Borrower has moved its business operations from Calgary, Alberta to the United States and
is seeking to obtain financing from an alternate lender, in an amount sufficient to repay all
present and future indebtedness and liabilities of the Borrower and each Material Subsidiary to
CIBC of any kind (whether direct or indirect, joint or several, absolute or contingent, matured or
unmatured) wherever or however incurred, and any ultimate unpaid balance thereof (collectively,
the “Obligations”);




D. Certain Defaults and Events of Default, as listed in Schedule “A” hereto, have occurred
and are continuing under the Credit Agreement (the “Existing Defaults”); and




E. The Borrower has requested, and CIBC has agreed, notwithstanding the Existing Defaults, to
forbear from exercising any of its remedies arising under the Credit Agreement, any other
Document, the Security or otherwise relating to the Existing Defaults (collectively, its
“Remedies”), subject to the terms and conditions of this Agreement;



          NOW THEREFORE, in consideration of the mutual agreements herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, CIBC and the
Borrower hereby agree as follows:










 




 




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	 	1. 	 	Definitions





Capitalized terms used in this 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:






	 	(a)	 	As of January 28, 2009, the Borrower is indebted to CIBC under the Credit
Agreement in the principal amount of Cdn. $6,290,948.88, 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 to CIBC in accordance with the terms of the
Credit Agreement and this Agreement;
	 
	 	(b)	 	The Existing Defaults have occurred and are continuing under the Credit
Agreement, and, subject to the terms and conditions of this Agreement, CIBC is
entitled to immediately exercise its Remedies;
	 
	 	(c)	 	All existing Security given to CIBC and the additional security Documents
delivered pursuant to Sections 5 hereof 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;
	 
	 	(d)	 	Subject to this Agreement, 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
	 
	 	(e)	 	All obligations of the Borrower and each Material Subsidiary under this
Agreement are secured by the Security and guaranteed under the guarantees previously
delivered by each Material Subsidiary.






	 	3. 	 	Forbearance 







	 	(a)	 	Subject to the satisfaction of the conditions precedent set forth in
Section 5 below, the other terms and conditions contained herein, and in
consideration of and reliance upon, the acknowledgements, confirmations and
agreements of the Borrower and each Material Subsidiary contained herein, CIBC hereby
agrees that it will forbear from exercising its Remedies as a result of the existence
or continuance of the Existing Defaults until the earlier of: (i) June 30, 2009; and
(ii) the occurrence of any Termination Event (as hereinafter defined) (the
“Forbearance Period”).










 



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	 	(b)	 	During the Forbearance Period and provided no Termination Event has
occurred, CIBC agrees to make revolving loans to the Borrower in accordance with the
terms and conditions of the Credit Agreement (other than any requirement that no
Default or Event of Default has occurred and is continuing if the only Defaults or
Events of Default that have occurred and are continuing are (i) the Existing Defaults
and (ii) any Default or Event of Default arising under Section 11.1 of the Credit
Agreement arising due to the failure of the Borrower to satisfy any of the financial
covenants set forth in Section 10.2(a) or (b) of the Credit Agreement as of the
fiscal quarter ending March 31, 2009 and June 30, 2009 (together with the Existing
Defaults, the “Specified Defaults”).







	 	4. 	 	Termination Events





The forbearance provided under this Agreement shall terminate upon the happening of any of the
following events (each a “Termination Event”):





	 	(a)	 	the occurrence or continuation of any Default or Event of Default under the
Credit Agreement or the Security, which is not a Specified Default;
	 
	 	(b)	 	the failure of the Borrower or any Material Subsidiary to comply with any
term, condition, covenant or other obligation set out in this Agreement; and
	 
	 	(c)	 	the Borrower’s cash position, net cash income (meaning EBITDA for such
period, minus the sum of (i) income taxes paid in cash during such period and (ii)
interest paid in cash during such period) or EBITDA is, at the end of any fiscal
month, less than that projected and shown on the line entitled “Cash, Ending Balance”
of the projections attached as Schedule “B” hereto (the “Cash Projections”).
Notwithstanding the foregoing, if the 2006 Income Tax Refund (as defined below) is
not received prior to the end of March, 2009, the amount described on the line
entitled “Cash, Ending Balance” for the aforementioned month shall be reduced by U.S.
$3,000,000.







	 	5. 	 	Conditions to Effectiveness





The forbearance provided in Section 3 above shall not become effective unless and until CIBC
has received each of the following, in form and substance satisfactory to CIBC on or before
February 2, 2009:





	 	(a)	 	a fully executed amended and restated Credit Agreement in the form attached
at Schedule “C”, hereto;
	 
	 	(b)	 	a fully executed copy of this Agreement; and
	 
	 	(c)	 	all invoiced amounts payable pursuant to Section 7(f) of this Agreement.










 



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	 	6. 	 	Remedies on Termination of Forbearance






	 	(a)	 	Upon the expiration or termination of the Forbearance Period, the
forbearance set forth in Section 3 above shall automatically, and without action,
notice, demand or any other occurrence, expire and CIBC shall be free in its sole and
absolute discretion to proceed to enforce any or all of its rights and remedies under
or in respect of this Agreement, the Credit Agreement, the Security and applicable
law, including without limitation, those enforcement and other rights and remedies
arising as a result of the Existing Defaults, without any further notice or time for
payment and each of the Borrower and Material Subsidiaries hereby waives notice
thereof.
	 
	 	(b)	 	Each of the Borrower’s and Material Subsidiaries’ payment and performance
obligations to CIBC pursuant to this Agreement, the Credit Agreement, the Security
and the Documents shall survive the expiration or termination of the Forbearance
Period.







	 	7. 	 	Covenants 





In consideration of CIBC’s agreement to forbear as set forth above, the Borrower covenants and
agrees that:





	 	(a)	 	on or before February 13, 2009 it shall deliver to CIBC, in form and
substance satisfactory to CIBC:






	 	i.	 	a fully executed New York state law security agreement from
the Borrower and each Material Subsidiary in favour of the Agent (the
“Security Agreement”);
	 
	 	ii.	 	a perfection certificate from an officer of the Borrower
and each Material Subsidiary; and
	 
	 	iii.	 	opinions of Borrower’s internal and New York external legal
counsel, with respect to the Borrower and each Material Subsidiary the
Security Agreement;






	 	(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”), it shall, within
two Banking Days, permanently repay Cdn. $1,200,000 of the Revolving Loan, such
repayment permanently reducing the Revolving Loan Commitment Amount to Cdn.
$7,800,000;
	 
	 	(c)	 	it shall repay all of the Obligations to CIBC on or before June 30, 2009;
	 
	 	(d)	 	it shall maintain the listing of its publicly traded securities on the
Toronto Stock Exchange and comply with its obligations as a reporting issuer under
applicable securities law;










 



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	 	(e)	 	the Borrower and each Material Subsidiary shall pay when due all statutory
claims which rank higher than the Security held by CIBC, which shall include, without
limitation, all amounts owing or required to be paid, where a failure to pay any such
amount could give rise to a claim pursuant to any law, statute, regulation or
otherwise, which, in a bankruptcy or state insolvency proceeding, ranks or is capable
of ranking higher in priority to the Security or otherwise in priority to any claim
by CIBC for the repayment of any amounts owing to it, including without limitation,
all amounts owing to any federal, state, local or other government entity;
	 
	 	(f)	 	the Borrower shall pay to CIBC, on demand by CIBC, whether or not all or
any of the transactions contemplated by this Agreement are consummated, all
out-of-pocket costs and expenses including, without limitation, reasonable fees and
disbursements of counsel to CIBC in connection with the preparation, negotiation,
execution, delivery, administration, interpretation, review, monitoring or
enforcement of this Agreement, the Credit Agreement, the Security and any other
Documents and any agreements, documents, or reports delivered in connection with the
transactions contemplated hereby or thereby. Without limiting the generality of the
foregoing, the Borrower and Material Subsidiaries acknowledge and agree that CIBC
shall have the right, at any time after the date hereof, to retain, upon terms and
conditions within its sole discretion, legal counsel and financial advisors of its
sole choosing, in connection with the Credit Agreement, this Agreement, any other
Document and all of the Borrower’s Obligations to CIBC, and the reasonable costs and
expenses thereof shall be paid by the Borrower or reserved by CIBC as provided
herein;
	 
	 	(g)	 	the Borrower shall not permit its shareholders’ equity (calculated in
accordance with GAAP) to be less than U.S. $4,000,000;
	 
	 	(h)	 	the Borrower shall not, and shall not permit any Material Subsidiary to,
make any payment of principal in respect of any of the Subordinated Debt;
	 
	 	(i)	 	it shall provide to CIBC, by no later than March 31, 2009, a detailed
business plan in form and substance acceptable to CIBC, for the Borrower and each
Material Subsidiary, describing the manner in which the Borrower will implement such
plan to meet the Projections for the Borrower and each Material Subsidiary provided
to CIBC in November, 2008 and the Cash Projections;
	 
	 	(j)	 	it shall promptly notify CIBC of the occurrence of any Termination Event or
any event which with notice or lapse of time or both would constitute a Termination
Event;
	 
	 	(k)	 	if the Borrower fails to deliver to CIBC a fully executed copy of the IOTV
award from the U.S. Army by April 30, 2009, which date may be extended in the event
of a formal request by the U.S. Army to further extend the proposal acceptance
period, the Borrower shall not, and shall not permit any Material Subsidiary to,










 



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	 	 	 	make any payment of principal, interest or any other amount in respect of any of the
Subordinated Debt;
	 
	 	(l)	 	the Borrower shall pay to CIBC the forbearance fee when required to be paid
to CIBC pursuant to Section 9 of this Agreement;
	 
	 	(m)	 	on or before February 13, 2009, the Borrower shall deliver to CIBC a fully
executed deposit account control agreement in respect of the operating bank accounts
of the Borrower and each Material Subsidiary, in form and substance satisfactory to
CIBC; and
	 
	 	(n)	 	the Borrower shall provide to CIBC, a deposit account control agreement, in
a form acceptable to CIBC, in respect of any additional bank accounts of the Borrower
and each Material Subsidiary that may be opened or established from time to time.







	 	8. 	 	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 this Agreement, the Credit Agreement and
the Documents;
	 
	 	(b)	 	This 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 obligation of the Borrower and each Material Subsidiary under this
Agreement, 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, insolvency, reorganization, or similar statutes affecting the
enforcement of creditors’ rights generally and by general principles of equity;
	 
	 	(d)	 	There is no matter, fact or event which is known to the Borrower or any
Material Subsidiary which has not been disclosed to CIBC which is likely to have a
Material Adverse Effect;
	 
	 	(e)	 	Any amount described in Section 7(f) above, owing by the Borrower or any
Material Subsidiary has been paid in full or is current and in good standing;










 



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	 	(f)	 	The Projections and the Cash Projections are based upon estimates and
assumptions stated therein, all of which Borrower believes to be reasonable and fair
in light of current conditions and current facts known to the Borrower and, as of the
delivery of each Compliance Certificate, reflect the Borrower’s good faith and
reasonable estimates of its future financial performance, including future
projections of Excess Cash Flow, and of the other information projected therein for
the period set forth therein;
	 
	 	(g)	 	All of the representations and warranties of the Borrower set forth in the
Credit Agreement are true and correct as of the date hereof, except to the extent
such representation and warranty may be rendered untrue by the existence of the
Existing Defaults; and
	 
	 	(h)	 	Except for the Existing Defaults listed in Schedule “A”, as of the
date hereof no Default or Event of Default has occurred and is continuing.







	 	9. 	 	Forbearance Fee





CIBC acknowledges receiving a work fee in the amount of U.S. $150,000 on or about December 23,
2008, such fee being fully earned and not refundable. The Borrower shall pay to CIBC a forbearance
fee of U.S. $50,000.00, which shall be fully earned on the execution and delivery of this Agreement
and paid to CIBC on the earlier of: (i) within 2 Banking Days of the Borrower’s receipt of the 2006
Income Tax Refund; and (ii) March 31, 2009. The forbearance fee shall constitute Indebtedness of
the Borrower under the Credit Agreement.






	 	10. 	 	Further Assurances





The Borrower and each Material Subsidiary hereby undertakes and agrees to execute and deliver
all such other agreements, documents, papers, matters and assurances as CIBC may reasonably require
or request in connection with the transactions contemplated by this Agreement for the purpose of
giving effect to this Agreement.






	 	11. 	 	No Waiver; Reservation of Rights







	 	(a)	 	Nothing in this Agreement waives or shall be deemed to waive any Default or
Event of Default (including without limitation, the Existing Defaults) or any right,
entitlement, privilege, benefit or remedy which CIBC may have now or at any time in
the future as a result of or in connection with any such Default or Event of Default.
	 
	 	(b)	 	No waiver by CIBC of any default, breach or non-compliance under this
Agreement or any Document will be effective unless in writing and signed by an
authorized representative of CIBC. No waiver will be inferred from or implied by any
failure to act or delay in acting by CIBC in respect of any default, breach of
non-observance or by anything done or omitted to be done by the Borrower or any
Material Subsidiary. No waiver by CIBC will operate as a waiver of any rights of
CIBC rights under this Agreement or any Document in respect of any subsequent
default, breach or non-observance (whether of the same or any other nature).










 



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	 	(c)	 	Without limiting the foregoing, CIBC reserves the right, in its sole and
unfettered discretion, to exercise any or all of its rights or remedies under the
Credit Agreement, the Security, the Uniform Commercial Code or other applicable law
following any Termination Event. CIBC has not waived any such rights or remedies,
and nothing in this Agreement or in any Document and no delay on the part of CIBC in
exercising any such rights or remedies, shall be construed as a waiver of any such
rights or remedies.







	 	12. 	 	Borrower’s Waiver and Release






	 	(a)	 	The Borrower and each Material Subsidiary acknowledges and agrees that the
actions of CIBC in connection with the Credit Agreement and the Documents and the
obligations of the Borrower and each Material Subsidiary thereunder and in entering
into this Agreement have been fair and reasonable and that CIBC (i) has not acted in
a managerial capacity with respect to the Borrower or any Material Subsidiary, and
(ii) has no fiduciary duty to the Borrower or any Material Subsidiary in connection
with this Agreement or the Credit Agreement. The Borrower and each Material
Subsidiary confirms that it has had the benefit of independent legal counsel in
connection with the preparation and negotiation of this Agreement. Furthermore, the
Borrower and each Material Subsidiary acknowledges that, in executing and delivering
this Agreement, the Borrower and each Material Subsidiary has acted and continues to
act freely and without duress.
	 
	 	(b)	 	In consideration of the agreements of CIBC contained herein and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower and each of the Material Subsidiaries on behalf of itself
and each of their respective successors and assigns, hereby absolutely,
unconditionally and irrevocably release, remise and forever discharge CIBC and each
of its successors and assigns, participants, affiliates, subsidiaries, branches,
divisions, predecessors, directors, officers, attorneys, employees, and other
representatives and advisors (CIBC and all such other Persons being hereinafter
referred to collectively as the “Releasees” and each individually as a “Releasee”),
of and from all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings,
damages and any and all other claims, counterclaims, defences, rights of set-off,
demands and liabilities whatsoever (individually, a “Claim” and collectively,
“Claims”) of every name and nature, known or unknown, suspected or unsuspected, both
arising at law and in equity, which the Borrower or any one or more of the Material
Subsidiaries or any of their successors, assigns or other legal representatives may
now own, hold, have or claim to have against the Releasees or any of them for, upon,
or by reason of any circumstance, action, cause or thing whatsoever which arises at
any time on or prior to the day and date of this Agreement, including, without
limitation, for or on account of, or in relation to, or in any way in connection
with, any of this Agreement, the Credit Agreement, the Security or any of the other
Documents or transactions or related thereto.










 



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	 	13. 	 	Effect of this Agreement





Except as modified pursuant to this Agreement, no other changes or modifications to the terms
of the Credit Agreement as amended and restated are intended or implied and in all other respects
the terms of the Credit Agreement are confirmed. To the extent there is any inconsistency between
the terms of the Credit Agreement and this Agreement, this Agreement shall control.






	 	14. 	 	No Novation





This Agreement will not discharge or constitute novation of any debt, obligation, covenant or
agreement contained in the Credit Agreement or the Documents but same shall remain in full force
and effect save to the extent same are amended by the provisions of this Agreement.






	 	15. 	 	Execution in Counterparts





This Agreement may be executed and delivered by facsimile or other electronic means and in any
number of counterparts, each of which when executed and delivered will be deemed to be an original,
but all of which taken together constitute one and the same instrument.






	 	16. 	 	No Set-Off, Etc.





The Borrower and each Material Subsidiaries reaffirms that each of the Credit Agreement and
the Security remains in full force and effect and acknowledges and agrees that there is no defence,
set-off, or counterclaim of any kind, nature or description to its obligations arising under any of
the Credit Agreement or the Security as a result of the execution of this Agreement or otherwise.






	 	17. 	 	Governing Law





This Agreement will be binding upon and enure to the benefit of the parties and their
respective successors and assigns, and will be governed by and construed in accordance with the
laws in force in the Province of Alberta from time to time.










 






          IN WITNESS WHEREOF the parties have executed this Agreement as of the date first written
above.




	 	 	 	 	 	 	 
	 	 	PROTECTIVE PRODUCTS OF AMERICA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

 

Name:

Title:
	 	/s/ Stephen Giordanella
 

Stephen Giordanella

Chief Executive Officer
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

 

Name:

Title:
	 	/s/ Jason Williams
 

Jason Williams

Chief Financial Officer
	 	 






	 	 	 	 	 
	 	CANADIAN IMPERIAL BANK OF COMMERCE

 	 
	 	By:  	/s/ J.S. McMurray 	 
	 	 	Authorized Officer

J.S. McMurray

General Manager 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	/s/ Doug Brown
 	 
	 	 	Authorized Office

Doug Brown

General Manager 	 
	 	 	 	 









 




	 	 	 	 	 



          THIS AGREEMENT is acknowledged, agreed with and consented to by each Material Subsidiary of
the Borrower, as guarantors, who each confirm that their respective guarantees of the obligations
and liabilities of the Borrower under the Credit Agreement remains in full force and effect and is
a valid and binding obligation of each of the undersigned.





     EFFECTIVE as of the date first written above.



	 	 	 	 	 	 	 	 	 	 	 
	CERAMIC PROTECTION CORPORATION OF 

AMERICA	 	 	 	CPC HOLDING CORPORATION OF AMERICA	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

 

Name: 

Title:

	 	/s/ Stephen Giordanella
 

Stephen Giordanella 


Chief Executive Officer
	 	 	 	By:

 

Name:

Title:
	 	/s/ Stephen Giordanella
 

Stephen Giordanella 


Chief Executive Officer
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Jason Williams
 

	 	 	 	By:
	 	/s/ Jason Williams
 

	 	 
	Name: 

Title:

	 	Jason Williams

Chief Financial Officer
	 	 	 	Name:

Title:
	 	Jason Williams

Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	PROTECTIVE PRODUCTS INTERNATIONAL  CORP.	 	 	 	PROTECTIVE PRODUCTS OF NORTH CAROLINA, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Stephen Giordanella
 

	 	 	 	By:
	 	/s/ Stephen Giordanella
 

	 	 
	Name: 

Title:

	 	Stephen Giordanella

Chief Executive Officer
	 	 	 	Name:

Title:
	 	Stephen Giordanella

Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Jason Williams
 

	 	 	 	By:
	 	/s/ Jason Williams
 

	 	 
	Name: 

Title:

	 	Jason Williams

Chief Financial Officer
	 	 	 	Name:

Title:
	 	Jason Williams

Chief Financial Officer	 	 












 



  


SCHEDULE “A”

EXISTING DEFAULTS



For purposes of this Schedule “A”, each section reference in this Schedule “A” is a reference to
the section in the Amended and Restated Credit Agreement dated as of the date hereof. The Borrower
and each Material Subsidiary hereby acknowledges, confirms, and agrees that the following Defaults
or Events of Default have occurred and are continuing:





     (i) Event of Default occurring under Section 11.1(a) of the Credit Agreement due to the
failure to pay the outstanding balance of the Revolving Loan on the Revolving Loan
Termination Date (as defined prior to giving effect to the amendment and restatement of the
Credit Agreement as of the date hereof) as required by Article 2 of the Credit Agreement;




     (ii) Defaults or Events of Default occurring under Section 11.1(c) of the Credit
Agreement arising due to the failure of the Borrower to pay the outstanding balance of the
Revolving Loan on the Revolving Loan Termination Date (as defined prior to giving effect to
the amendment and restatement of the Credit Agreement as of the date hereof) as required by
Section 10.1(a) of the Credit Agreement;




     (iii) Defaults or Events of Default occurring under Section 11.1(c) of the Credit
Agreement arising due to the failure of the Borrower to notify the Agent of any of the
“Existing Defaults” set forth on this Schedule “A”, in each case, as required by Section
10.1(c) of the Credit Agreement;




     (iv) Defaults or Events of Default occurring under Section 11.1(c) of the Credit
Agreement arising due to the failure of the Borrower to observe, and cause each Material
Subsidiary to observe, the terms of and obligations under each of the Documents to the
extent that the failure of observe any such provision is described in items (i) through
(iii) and (v) through (xix) on this Schedule “A”, in each case, as required by Section
10.1(h) of the Credit Agreement;




     (v) Default or Event of Default occurring under Section 11.1(c) of the Credit Agreement
arising due to the failure of the Borrower to deliver a compliance certificate with respect
to the fiscal quarter ended September 30, 2008 as required by Section 10.1(i) of the Credit
Agreement (as in effect prior to giving effect to the amendment and restatement of the
Credit Agreement as of the date hereof);




     (vi) Defaults or Events of Default occurring under Section 11.1(c) of the Credit
Agreement arising due to the failure of the Borrower to furnish any Borrowing Base
Certificates required to be delivered pursuant to such section prior to the date hereof as
required by Section 10.1(l) of the Credit Agreement;




     (vii) Default or Event of Default occurring under Section 11.1(c) of the Credit
Agreement arising due to the failure of the Borrower to cause Protective Products of North
Carolina, LLC to deliver the documents required to be delivered thereunder within









 



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10 days of Protective Products of North Carolina, LLC becoming a Material Subsidiary as
required by Section 10.1(w) of the Credit Agreement;




     (viii) Defaults or Events of Default occurring under Section 11.1(c) of the Credit
Agreement due to the failure of the Borrower to comply with Section 10.2(a) of the Credit
Agreement on the last day of the fiscal quarters ended on the following dates: September 30,
2007, December 31, 2007, March 31, 2008, June 30, 2008, September 30, 2008 and December 31,
2008;




     (ix) Defaults or Events of Default occurring under Section 11.1(c) of the Credit
Agreement due to the failure of the Borrower to comply with Section 10.2(b) of the Credit
Agreement on the last day of the fiscal quarters ended on the following dates: June 30,
2008, September 30, 2008 and December 31, 2008;




     (x) Defaults or Events of Default occurring under Section 11.1(c) of the Credit
Agreement due to the failure of the Borrower to comply with Section 10.2(c) of the Credit
Agreement on the last day of the fiscal quarters ended on the following dates: September
30, 2007 and December 31, 2007;




     (xi) Default or Event of Default occurring under Section 11.1(c) of the Credit
Agreement arising because the Borrower changed the location of its chief executive office to
1649 NW 136th Ave, Sunrise, Florida 33323 without giving the Agent 30 days’ prior written
notice thereof as required by Section 10.3(j) of the Credit Agreement;




     (xii) Default or Event of Default occurring under Section 11.1(c) of the Credit
Agreement arising due to the failure of the Borrower to obtain prior written consent of all
of the Lenders prior to selling four furnaces for approximately U.S.$280,000 in December
2008;




     (xiii) Default or Event of Default occurring under Section 11.1(c) of the Credit
Agreement arising because Ceramic Protection Corporation amended its constating documents
and by-laws when Ceramic Protection Corporation domesticated under the laws of the State of
Delaware as Protective Products of America, Inc. in violation of Section 10.3(f) of the
Credit Agreement;




     (xiv) Event of Default occurring under Section 11.1(l) of the Credit Agreement because
Protective Products of North Carolina, LLC ceased to carry on its business prior to the date
hereof;




     (xv) Event of Default occurring under Section 11.1(r) of the Credit Agreement due to
the failure of the Borrower to comply with the terms thereof by August 8, 2008; and




     (xvi) Event of Default occurring under Section 11.1(s) of the Credit Agreement due to the failure
of the Borrower to comply with the terms thereof by August 8, 2008.









 



 


SCHEDULE “B”

CASH PROJECTIONS










 



 




SCHEDULE “C”

AMENDED AND RESTATED CREDIT AGREEMENT