EXHIBIT 10.10
EIGHTH AMENDMENT TO CREDIT AGREEMENT
THIS EIGHTH AMENDMENT TO CREDIT AGREEMENT (the "EIGHTH AMENDMENT") is
made and dated as of February __, 2001, by and among SANWA BANK CALIFORNIA
("SANWA"), those other banks (each, including Sanwa, a "LENDER" and,
collectively, the "LENDERS"), party with Sanwa to the Agreement defined in
Recital A below, SANWA, as agent for the Lenders (in such capacity, the "AGENT")
and as the L/C Bank (as defined in the Agreement), and NTS TECHNICAL SYSTEMS, a
California corporation (the "BORROWER").
RECITALS
A. Pursuant to that certain Credit Agreement dated as of September 8,
1997 among the Agent, the Lenders and the Borrower (as amended, modified, or
waived, the "AGREEMENT"), the Lenders agreed to extend credit to the Borrower on
the terms and subject to the conditions set forth therein. All capitalized terms
not otherwise defined herein shall have the meanings given to such terms in the
Agreement.
B. The Borrower has asked the Agent, the L/C Bank and the Lenders to
modify certain provisions of the Agreement relating to permitted distributions,
dividends and stock repurchases.
C. The Agent, the L/C Bank and the Lenders have agreed to such requests
of the Borrower on the terms and conditions contained in this Eighth Amendment.
NOW, THEREFORE, in consideration of the foregoing Recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. PERMITTED STOCK REPURCHASE. To reflect the agreement of the parties
hereto to permit certain stock repurchases by the Parent, Section 7(e) and
Section 7(f) of the Agreement are amended to read as follows:
"7(e) PURCHASE OR RETIREMENT OF STOCK; PAYMENT OF DIVIDENDS.
Acquire, purchase, redeem or retire any shares of its capital stock now or
hereafter outstanding or, except to the Borrower, declare or pay any dividends
upon its shares of stock now or hereafter outstanding or make any distribution
of assets to its stockholders as such, whether in cash, property or securities,
except (i) dividends by the Borrower to the Parent, (ii) dividends by the Parent
to its shareholders and/or repurchases of stock by the Parent in an aggregate
amount in any fiscal year not to exceed 40% of the consolidated net income of
the Parent in the immediately preceding fiscal year, (iii) dividends payable in
shares of capital stock, and (iv) cash in lieu of fractional shares or in
options, warrants or other rights to purchase shares of capital stock.
"7(f) INTENTIONALLY DELETED."
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2. DEBT COVERAGE RATIO. To modify the calculation of the Debt Coverage
Ratio in connection with the repurchase of stock permitted pursuant to Section 1
of this Eighth Amendment, the definition of "Debt Service Coverage Ratio" in
PARAGRAPH 1 of the Agreement is amended to read as follows:
"'DEBT COVERAGE RATIO' shall mean the ratio of (i) for any period, (a)
net profit after taxes realized during such period plus (b)
depreciation and amortization expense and interest expense deducted in
determining such net income to (ii) the sum of the current portion of
long-term debt as at the end of such period plus interest expense and
cash dividends paid and/or stock repurchases made (pursuant to the
terms of Paragraph 7(e) below) during the period just ended. In
calculating the Debt Coverage Ratio, the $1,237,000.00 after-tax impact
of the non-recurring expenses defined in the Fourth Amendment to this
Agreement as the Techstar Lawsuit and the Discontinued Operations shall
be disregarded."
3. REAFFIRMATION OF SECURITY AGREEMENTS. The Borrower hereby affirms
and agrees that, except as otherwise provided herein, (a) the execution and
delivery by the Borrower of and the performance of its obligations under this
Eighth Amendment shall not in any way amend, impair, invalidate or otherwise
affect any of the Obligations of the Borrower or the rights of the Lenders under
the Security Documents or any other document or instrument made or given by the
Borrower in connection therewith, (b) the term "OBLIGATIONS" as used in the
Security Agreement includes, without limitation, the Obligations of the Borrower
under the Agreement as amended hereby, and (c) the Security Documents remain in
full force and effect and constitute a continuing first priority security
interest in and lien upon the Collateral described therein.
7. EFFECTIVE DATE. This Eighth Amendment shall be effective on the date
(the "EFFECTIVE DATE") when all of the following conditions precedent have been
satisfied:
(a) The Borrower shall have delivered or shall have had delivered to
the Agent each of the following (with sufficient copies for each of the
Lenders):
(i) A duly executed copy of this Eighth Amendment; and
(ii) Such credit applications, financial statements,
authorizations and such information concerning the Borrower and its Guarantors
and their business, operations and condition (financial and otherwise) as any
Lender may reasonably request.
(b) Any and all fees and other amounts payable hereunder on or prior
to such date shall have been paid, and all acts and conditions (including,
without limitation, the obtaining of any necessary regulatory approvals and the
making of any required filings, recordings or registrations) required to be done
and performed and to have happened precedent to the execution, delivery and
performance of this Eighth Amendment and to constitute the same legal, valid and
binding obligations, enforceable in accordance with their respective terms,
shall have been done and performed and shall have happened in due and strict
compliance with all applicable laws.
(c) The representations and warranties made by or on behalf of the
Borrower and each Guarantor in or pursuant to the Loan Documents (and by
executing and delivering this Eighth Amendment, the Borrower represents that all
such representations and warranties) shall be accurate and complete in all
material respects as if made on and as of such date (or as of December 31, 2000
if such representations and warranties relate to the financial results or
condition of the Borrower).
(d) There shall not have occurred an Event of Default or Potential
Default not otherwise cured or waived.
8. REPRESENTATIONS AND WARRANTIES. As an inducement to the Agent, the
L/C Bank and each Lender to enter into this Eighth Amendment, the Borrower
represents and warrants to the Agent, the L/C Bank and each Lender that:
(a) CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Borrower and each
Guarantor (1) is duly organized, validly existing and in good standing as a
corporation under the laws of the state of its incorporation and is qualified to
do business in each jurisdiction where its ownership of property or conduct of
business requires such qualification and where failure to qualify would have a
material adverse effect on it or its property and/or business or on its
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ability to pay or perform the Obligations, (2) has the corporate power and
authority and the legal right to own and operate its property and to conduct
business in the manner in which it does and proposes so to do, and (3) is in
compliance with all Requirements of Law and Contractual Obligations.
(b) CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
Borrower and each Guarantor has the corporate power and authority and the legal
right to execute, deliver and perform this Eighth Amendment and the Agreement as
amended hereby to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of this Eighth
Amendment and the Agreement as amended hereby. This Eighth Amendment and the
Agreement as amended hereby have been duly executed and delivered on behalf of
the Borrower and each Guarantor party thereto and constitute such Person's
legal, valid and binding obligations enforceable against it in accordance with
their respective terms, subject to the effect of applicable bankruptcy and other
similar laws affecting the rights of creditors generally and the effect of
equitable principles whether applied in an action at law or a suit in equity.
(c) NO LEGAL BAR. The execution, delivery and performance of this
Eighth Amendment and the Agreement as amended hereby, the borrowings hereunder
and the use of the proceeds thereof, will not violate any Requirement of Law or
any Contractual Obligations of the Borrower or any Guarantor or create or result
in the creation of any Lien on any assets of the Borrower or any Guarantor
except as contemplated thereby.
(d) NO MATERIAL LITIGATION. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower or any Guarantor, threatened by or against the
Borrower or any Guarantor or against any of the Borrower's or any Guarantor's
properties or revenues which is likely to be adversely determined and which, if
adversely determined, is likely to have a material adverse effect on the
business, operations, property or financial or other condition of the Parent and
its Subsidiaries, taken as a whole.
(e) CONSENTS, ETC. No consent, approval, authorization of, or
registration, declaration or filing with any Governmental Authority is required
on the part of the Borrower or any Guarantor in connection with the execution
and delivery of this Eighth Amendment and the Agreement as amended hereby or the
performance of or compliance with the terms, provisions and conditions hereof or
thereof.
(f) NO DEFAULT. No Potential Default or Event of Default has
occurred under the Agreement which has not otherwise been cured or waived.
(g) FULL DISCLOSURE. None of the representations or warranties made
by the Borrower or any Guarantor in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Borrower or any Guarantor in connection with the Loan
Documents contains any untrue statement of a material fact or omits any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made, not misleading
as of the time when made or delivered.
9. MISCELLANEOUS PROVISIONS.
(a) EXPENSES. In accordance with PARAGRAPH 6(G) of the Agreement,
the Borrower agrees to pay all reasonable out-of-pocket expenses of the Agent
incident to the preparation and negotiation of this Eighth Amendment.
(b) ENTIRE AGREEMENT. This Eighth Amendment embodies the entire
agreement and understanding between the parties hereto and supersedes all prior
agreements and understandings relating to the subject matter hereof and thereof.
(c) GOVERNING LAW. This Eighth Amendment shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to choice of law rules.
(d) COUNTERPARTS. This Eighth Amendment may be executed in any
number of counterparts, all of which together shall constitute one agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Eighth
Amendment to be executed as of the day and year first above written.
NTS TECHNICAL SYSTEMS, a California corporation
By: /s/ XXXXX XXXXXXX
-----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Financial Officer
SANWA BANK CALIFORNIA, as Agent and the L/C Bank
By: /s/ XXXXXX XXXXX
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
SANWA BANK CALIFORNIA, as a Lender
By: /s/ XXXXXX XXXXX
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
MELLON BANK, N.A., as a Lender
By: /s/ XXXXX XXXXXXXXX
----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
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REAFFIRMATION OF GUARANTIES
Each of the undersigned Guarantors agrees to the terms of this Eighth Amendment
and hereby ratifies and reaffirms its Guaranty of the Obligations of the
Borrower and its grant of a security interest in certain property to secure such
Guaranty in favor of the Agent, on behalf of itself, the Lender, and the L/C
Bank and agrees that, notwithstanding this Eighth Amendment and any other
amendment or supplement to the Agreement entered into prior to this Eighth
Amendment, its Guaranty shall remain in full force and effect with respect to
the Agreement as amended hereby.
NATIONAL TECHNICAL SYSTEMS, INC.
By: /s/ XXXXX XXXXXXX
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Financial Officer
ETCR, INC.
By: /s/ XXXXX XXXXXXX
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
APPROVED ENGINEERING TEST LABORATORIES, INC.
By: /s/ XXXXX XXXXXXX
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
ACTON ENVIRONMENTAL TESTING CORPORATION
By: /s/ XXXXX XXXXXXX
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
XX CAL, INC.
By: /s/ XXXXX XXXXXXX
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
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