EXHIBIT 10.11
AMENDMENT NUMBER SEVEN TO REVOLVING CREDIT AGREEMENT
This AMENDMENT NUMBER SEVEN TO REVOLVING CREDIT AGREEMENT (this
"Amendment"), dated as of September 21, 2006, is entered into among NATIONAL
TECHNICAL SYSTEMS, INC., a California corporation ("Parent"), NTS TECHNICAL
SYSTEMS, a California corporation, dba National Technical Systems ("NTS"),
XXCAL, INC., a California corporation ("XXCAL"), APPROVED ENGINEERING TEST
LABORATORIES, INC., a California corporation ("AETL"), ETCR, INC., a California
corporation ("ETCR"), ACTON ENVIRONMENTAL TESTING CORPORATION, a Massachusetts
corporation ("Acton"), and PHASE SEVEN LABORATORIES, INC., a California
corporation ("Phase Seven") and one or more Subsidiaries of Parent, whether now
existing or hereafter acquired or formed, which become party to the Agreement
(as defined below) by executing an Addendum in the form of Exhibit 1 of the
Agreement (NTS, XXCAL, AETL, ETCR, Acton, Phase Seven and such other
Subsidiaries are sometimes individually referred to herein as a "Subsidiary
Borrower" and collectively referred to herein as "Subsidiary Borrowers", and
Subsidiary Borrowers and Parent are sometimes individually referred to herein as
a "Borrower" and collectively referred to herein as "Borrowers"), the financial
institutions from time to time parties hereto as Lenders, whether by execution
hereof or an Assignment and Acceptance in accordance with Section 11.5(c) of the
Agreement, and Comerica Bank, in its capacity as contractual representative for
itself and the other Lenders ("Agent"), with reference to the following facts:
A. Borrowers, Agent and Lenders are parties to that certain Revolving
Credit Agreement, dated as of November 21, 2001, as amended by that certain
Amendment Number One to Revolving Credit Agreement, dated as of July 17, 2002,
that certain Amendment Number Two to Revolving Credit Agreement, dated as of
November 25, 2002, that certain Amendment Number Three to Revolving Credit
Agreement, dated as of July 21, 2003, that certain Amendment Number Four to
Revolving Credit Agreement, dated as of July 30, 2004, that certain Amendment
Number Five to Revolving Credit Agreement, dated as of July 1, 2005, and that
certain Amendment Number Six to Revolving Credit Agreement, dated as of March
29, 2006 (as so amended, the "Agreement");
B. Borrowers and Agent, in its capacity as Agent for the Lenders, entered
into that certain Security Agreement, dated as of November 21, 2001 (the
"Security Agreement");
C. Borrowers, Agent and Lenders desire to further amend the Agreement in
accordance with the terms of this Amendment.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
hereby agree as follows:
1. Defined Terms. All initially capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Agreement.
2. Amendments to the Agreement.
2.1 Definitions.
(a) The following definitions set forth in Section 1.1 of the
Agreement are hereby amended in their entirety as follows, and the amended
definition of "Debt Service Coverage Ratio" shall be deemed effective as of the
reporting period ending July 31, 2006:
"Commitment" means a Lender's Revolving Credit Commitment, Term Loan
Commitment, Equipment Loan Commitment, Term Loan B Commitment, Equipment
Facility B Loan Commitment and/or Term Loan C Commitment, as the context
requires.
"Debt Service Coverage Ratio" means, for the rolling four fiscal
quarter period ending on the date of determination, the ratio of (i) the
sum, without duplication, of: (1) Consolidated Adjusted Net Income for
such period, plus (2) each Borrower's and the Subsidiaries' consolidated
depreciation and amortization expense for such period (including any
non-cash compensation paid to Borrowers' and the Subsidiaries' officers,
directors, employees, and agents), minus (3) any Distributions paid or
Capital Stock of each Borrower acquired or any other action taken under
Section 7.10 during such period, plus or minus (4) any change in
Borrowers' deferred federal or state taxes during such period, minus (5)
unfunded cash Capital Expenditures during such period (other than any
fixed assets acquired pursuant to a Permitted Acquisition), plus (6) for
the test period ending July 31, 2006, $2,000,000, and for the test period
ending October 31, 2006, $1,300,000; to (ii) the sum of: (1) the current
portion of Borrowers' long term Debt that will be due during the next four
fiscal quarter period, plus (2) the current portion of Borrowers' Capital
Lease Obligations that will be due during the next four fiscal quarter
period.
"Interest Payment Date" means:
(i) with respect to each Prime Lending Rate Portion, the last
day of each and every month commencing the last such day after the making
of such Loan, and the Equipment Loans Maturity Date (in the case of the
Equipment Loans), the Equipment Facility B Loans Maturity Date (in the
case of the Equipment Facility B Loans), the Revolving Loans Maturity Date
(in the case of the Revolving Loans), the Term Loans Maturity Date (in the
case of the Term Loans), the Term Loans B Maturity Date (in the case of
the Term Loans B); and the Term Loans C Maturity Date (in the case of the
Term Loans C)
(ii) with respect to each LIBOR Lending Rate Portion, the
earlier of: (1) the last day of the Interest Period with respect thereto,
or (2) if the Interest Period has a duration of more than three months,
every LIBOR Business Day that occurs during such Interest Period every
three months from the first day of such Interest Period; and
(iii) with respect to the COF Lending Rate Loans, the last day
of each and every month, and the Equipment Loans Maturity Date and the
Equipment Facility B Loans Maturity Date, as applicable."
"Loans" means the Revolving Loans, the Term Loans, the Equipment
Loans, the Term Loans B, the Term Loans C and the Equipment Facility B
Loans (each, a "Loan").
"Notes" means, collectively, the Revolving Notes, the Term Notes,
the Equipment Loans Notes, the Term B Notes, the Term C Notes and the
Equipment Facility B Notes (each, a "Note").
"Permitted Debt" means (i) Debt owing to Agent and Lenders in
accordance with the terms of this Agreement and the Loan Documents, (ii)
Debt listed on Schedule 5.6, (iii) Debt of Borrowers up to a maximum
aggregate amount of Two Million Dollars ($2,000,000) incurred during each
fiscal year (but without carry-forward of any amounts not incurred during
any fiscal year), incurred in the ordinary course of business and secured
by the Liens described in clause (iv) of the definition of Permitted Liens
hereinbelow, (iv) trade payables incurred in the ordinary course of
business described in clause (iv) of the definition of "Debt" hereinabove,
and (v) unsecured Debt in an aggregate amount not to exceed One Million
Dollars ($1,000,000) outstanding at any time among all Borrowers owing to
officers and employees of any Borrower.
"Revolving Loans Maturity Date" means August 1, 2008.
"Total Commitment Percentage" means, with respect to any Lender, the
percentage equal to sum of such Lender's Revolving Loan Commitment, Term
Loan Commitment, Equipment Loan Commitment, Term Loan B Commitment, Term
Loan C Commitment and Equipment Facility B Commitment, divided by the
Total Credit."
"Total Credit" means $28,900,000.
(b) The definition of "Interest Period" in Section 1.1 of the
Agreement is hereby amended to amend clause (iii) to read as follows:
(iii) no Interest Period respecting a Revolving Loan may
extend beyond the Revolving Loans Maturity Date, no Interest Period
respecting the Term Loans may extend beyond the Term Loans Maturity Date,
no Interest Period respecting the Term Loans B may extend beyond the Term
Loans B Maturity Date, and no Interest Period respecting the Term Loans C
may extend beyond the Term Loans C Maturity Date.
(c) The following definitions are hereby added to Section 1.1 of the
Agreement in alphabetical order:
"Dynamic Assets" means the assets of Dynamic Labs LLC and its
subsidiaries.
"Equipment Facility B Loan Commitment" means, with respect to any
Equipment Facility B Loan Lender, the amount indicated under such Lender's
name on Schedule 1.1C under the heading Equipment Facility B Loan
Commitment or, in the case of any Lender that is an assignee Lender
pursuant to Section 11.5(c), the amount of the assigning Lender's
Equipment Facility B Loan Commitment assigned to such assignee Lender
(collectively, the "Equipment Facility B Loan Commitments").
"Equipment Facility B Loan Commitment Percentage" means, with
respect to any Equipment Facility B Loan Lender, the percentage indicated
on Schedule 1.1C under the heading Equipment Facility B Loan Commitment
Percentage or, in the case of any Lender that is an assignee Lender
pursuant to Section 11.5(c), the percentage of the assigning Lender's
Equipment Facility B Loan Commitment assigned to such assignee Lender.
"Equipment Facility B Loan Lender" means each of the Lenders
indicated on Schedule 1.1C under the heading Equipment Facility B Loan
Lenders, and also means any assignee of such Lender pursuant to Section
11.5(c).
"Equipment Facility B Loans" has the meaning given to such term in
Section 2.3(d).
"Equipment Facility B Loans Conversion Date" means September 21,
2007.
"Equipment Facility B Loans Maturity Date" means September 21, 2011.
"Equipment Facility B Loans Notes" means, collectively, the
promissory notes executed by each Borrower to the order of each Lender
pursuant to Section 2.11(a) to evidence such Lender's Equipment Facility B
Loans.
"Term Loan C Commitment" means, with respect to any Term Loan C
Lender, the amount indicated opposite such Lender's name on Schedule 1.1C
under the heading Term Loan C Commitment or, in the case of any Lender
that is an assignee Lender pursuant to Section 11.5(c), the amount of the
assigning Lender's Term Loan C Commitment assigned to such assignee Lender
(collectively, the "Term Loan C Commitments").
"Term Loan C Commitment Percentage" means, with respect to any Term
Loan C Lender, the percentage indicated on Schedule 1.1C under the heading
Term Loan C Commitment Percentage or, in the case of any Lender that is an
assignee Lender pursuant to Section 11.5(c), the percentage the assigning
Lender's Term Loan C Commitment assigned to such assignee Lender.
"Term Loan C Lender" means each of the Lenders indicated on Schedule
1.1C under the heading Term Loan C Lenders, and also means any assignee of
such Lender pursuant to Section 11.5(c).
"Term Loans C Maturity Date" means September 21, 2010.
"Term C Notes" means, collectively, the promissory notes executed by
each Borrower to the order of each Lender pursuant to Section 2.11(a) to
evidence such Lender's Term Loan C.
2.2 Term Loans B and C. Section 2.2 of the Agreement is hereby amended by
changing the numbering of the third clause incorrectly numbered as the second
clause to "(b)" to clause "(c)" and by adding clauses (e) and (f) as follows:
(e) Several Term Loans C. Subject to the terms and conditions
hereof, each Term Loan C Lender severally agrees to make a term loan (each
a "Term Loan C" and collectively the "Term Loans C") to Borrowers on
September 21, 2006, or as soon as practicable thereafter, in an amount
equal to each such Term Loan C Lender's Term Loan C Commitment, the
proceeds of which shall be used to repay Revolving Loans used to pay the
purchase price paid by Parent to acquire the Dynamic Assets. Each Term
Loan B Lender shall make the amount of such Lender's Term Loan B available
to Agent in same day funds, not later than 9:00 a.m. (Pacific time), on
September 21, 2006, or as soon as practicable thereafter. After Agent's
receipt of the proceeds of the Term Loans C, Agent shall disburse the Term
Loans C as directed pursuant to written disbursement instructions provided
by Borrowers.
(f) Amortization. Borrowers shall pay forty-eight monthly principal
reduction payments on the Term Loans C, each in the aggregate amount of
$41,670. Each such payment shall be due and payable on the last day of
each month commencing September 30, 2006 and continuing on the last day of
each succeeding month. On the Term Loans C Maturity Date, the outstanding
principal balance, and all accrued and unpaid interest under the Term
Loans C shall be due and payable in full. Borrowers may prepay the Term
Loans C at any time, in whole or in part, without penalty or premium
except as otherwise required by Section 2.7(a) with respect to repayments
of LIBOR Lending Rate Portions. All principal amounts so repaid or prepaid
may not be reborrowed. Borrowers shall give Agent at least two (2) LIBOR
Business Days' prior written notice of any prepayment of a LIBOR Lending
Rate Portion, upon receipt of which, Agent shall promptly give notice to
each Term Loan C Lender. Upon receipt of any such notice of a prepayment,
Agent shall promptly notify each Term Loan C Lender thereof. Agent shall,
promptly following its receipt of any payment or prepayment of the Term
Loans C, distribute to each Term Loan C Lender its pro rata share (based
upon the principal amounts outstanding) of all amounts received by Agent
pursuant to this Section 2.2 for each such Term Loan C Lender's respective
account. All prepayments shall be applied toward scheduled principal
reductions payments owing under this Section 2.2 in inverse order of
maturity.
2.3 Equipment Facility B Loans. Section 2.3 of the Agreement is hereby
amended subsections (d), (e) and (f) as follows:
(d) Several Equipment Facility B Loans. Subject to the terms and
conditions hereof, from September 21, 2006 up to but not including the
Equipment Facility B Loans Conversion Date, each Equipment Facility B Loan
Lender severally agrees to make a series of term loans (each, an
"Equipment Facility B Loan" and collectively the "Equipment Facility B
Loans") to or for the benefit of Borrowers, in an amount equal to such
Equipment Facility B Loan Lender's Equipment Facility B Loan Percentage of
each Borrowing of Equipment Facility B Loans, up to an aggregate amount
not to exceed such Equipment Facility B Loan Lender's Equipment Facility B
Loan Commitment. Each Borrowing consisting of Equipment Facility B Loans
shall be advanced directly to the applicable vendor or Borrower, as
Borrowers may request. The foregoing to the contrary notwithstanding, (i)
each Borrowing consisting of Equipment Facility B Loans shall be in an
amount, as determined by the Equipment Facility B Loan Lenders, not to
exceed 100% of Borrowers' invoice cost (net of shipping, freight,
installation, and other so-called "soft costs") of new Equipment that is
to be purchased by Borrowers with the proceeds of such Borrowing, or new
Equipment that has been purchased and accepted by Borrowers within 90 days
prior to the date of such Borrowing, provided that as to the initial
Equipment Facility B Loan only such 90-day restriction shall not be
applicable but all Equipment to be financed by such initial Equipment
Facility B Loan shall have been acquired by Borrower during its fiscal
year ending January 31, 2007, (ii) the Equipment that is to be acquired or
that has been purchased by Borrowers must be acceptable to the Equipment
Facility B Loan Lenders in all respects, and, except for any Equipment
that is or will be installed on any Real Property Collateral upon delivery
to Borrowers, not be a fixture, and not be intended to be affixed to real
property or to become installed in or affixed to other goods unless
waivers or fixture filings acceptable to the Equipment Facility B Loan
Lenders and Agent have been obtained, and (iii) the Equipment Facility B
Loan Lenders shall have no obligation to fund any Equipment Facility B
Loans hereunder to the extent that the making thereof would cause the then
outstanding amount of all Equipment Facility B Loans to exceed the
aggregate Equipment Facility B Loan Commitments. On the Equipment Facility
B Loans Conversion Date, each Equipment Facility B Loan Lender's
obligations to make Equipment Facility B Loans to Borrowers shall cease.
Each Borrowing of Equipment Facility B Loans shall be in a minimum amount
of $100,000.
(e) Payments. From the Amendment Date until the Equipment Facility B
Loans Conversion Date, no principal payments shall be due on the
outstanding Equipment Facility B Loans; provided that Borrowers shall make
interest payments thereon during such period in accordance with Section
2.4. The aggregate amount of all Equipment Facility B Loans outstanding on
the Equipment Facility B Loans Conversion Date shall be repayable in equal
monthly installments of principal, each such installment in an amount
equal to 1/48th of the aggregate principal amount of Equipment Facility B
Loans outstanding on the Equipment Facility B Loans Conversion Date, and
such installments to be due and payable on the last day of each month
commencing October 31, 2007 and continuing on the last day of each
succeeding month until the Equipment Facility B Loans Maturity Date,
whereupon the entire remaining unpaid principal balance
of the Equipment Facility B Loans together with all accrued but unpaid
interest thereon shall be due and payable.
(f) Prepayment. Borrowers may prepay the Equipment Facility B Loans
at any time, in whole or in part, without penalty or premium except as
otherwise required by Section 2.16 with respect to prepayments of COF
Lending Rate Loans. All principal amounts so repaid or prepaid may not be
reborrowed. Agent shall, promptly following its receipt of any payment or
prepayment of the Equipment Facility B Loans, distribute to each Equipment
Facility B Loan Lender, its pro rata share (based upon the principal
amounts outstanding) of all amounts received by Agent pursuant to this
Section 2.3 for each such Lender's respective account. All prepayments
shall be applied toward scheduled principal reductions payments owing
under Section 2.3(b) in inverse order of maturity.
2.4 Interest Rates. Section 2.4(a) of the Agreement is hereby amended to
add subsections (iv) and (v) as follows:
(iv) Term Loans C. Subject to the terms and conditions hereof,
the Term Loans C, or portions thereof, may be outstanding as either Prime
Lending Rate Portions or LIBOR Lending Rate Portions, by designating, in
accordance with Sections 2.5(b) and 2.6(b), either the Prime Lending Rate,
or the LIBOR Lending Rate to apply to all or any portion of the unpaid
principal balance of the Term Loans C; provided, however, there shall be
no more than three (3) LIBOR Lending Rate Portions of Term Loans C
outstanding at any time. LIBOR Lending Rate Portions of Term Loans C shall
be in minimum amounts each of One Million Dollars ($1,000,000).
(v) Equipment Facility B Loans. Subject to the terms and
conditions hereof, all Equipment Facility B Loans shall be outstanding as
Prime Lending Rate Portions; provided, however, at any time from and after
the Equipment Facility B Loans Conversion Date, Borrowers shall have the
option to convert the entire outstanding balance of Equipment Facility B
Loans to COF Lending Rate Loans upon three (3) Business Days' prior
written notice to Agent.. If Borrowers fail to exercise such option, the
Equipment Facility B Loans shall continue to be outstanding as Prime
Lending Rate Portions from and after the Equipment Facility B Loans
Conversion Date. Once the Equipment Facility B Loans have been converted
to COF Lending Rate Loans pursuant to this clause (v), such COF Lending
Rate Loans may not be converted back to Prime Lending Rate Portions.
2.5 Conversion or Continuation Requirements. Section 2.6(a) of the
Agreement is hereby amended to add the following sentence at the end thereof as
follows:
If Borrowers elect to convert the entire balance of the Equipment Facility
B Loans to COF Lending Rate Loans after the Equipment Facility B Loans
Conversion Date pursuant to Section 2.4(a)(v), such COF Lending Rate Loans
may not be converted back into Prime Lending Rate Portions.
2.6 Notes. Sections 2.11(a) and (b) of the Agreement are hereby amended as
follows:
(a) Borrowers agree that, upon the request to Agent by any
Lender if and to the extent that such Lender has a Commitment as of date
of request, or in connection with any assignment pursuant to Section
11.5(c), to evidence such Lender's Loans, Borrowers will execute and
deliver to such Lender a Revolving Note, Term Note, Equipment Loans Note,
Term B Notes and/or Equipment Facility B Loans Note, as applicable,
substantially in the forms of Exhibit 2.11(a), with appropriate insertions
as to payee, date and principal amount (each, as amended, supplemented,
replaced or otherwise modified from time to time, a "Note" and,
collectively, the 'Notes"), payable to the order of such Lender and in a
principal amount equal to such Lender's Revolving Credit Commitment, Term
Loan Commitment, Equipment Loan Commitment, Equipment Facility B Loan
Commitment, Term Loan B Commitment and/or Term Loans C Commitment, as
applicable. Each Note shall (x) be dated the date the applicable
Commitment became effective, (y) be payable as provided herein and (z)
provide for the payment of interest in accordance with Section 2.4.
(b) The Revolving Loans and Borrowers' obligation to repay the
same shall be evidenced by the Revolving Notes, this Agreement and the
books and records of Agent and the Revolving Loan Lenders. The Term Loans
and Borrowers' obligation to repay the same shall be evidenced by the Term
Notes, this Agreement and the books and records of Agent and the Term Loan
Lenders. The Equipment Loans and Borrowers' obligation to repay the same
shall be evidenced by the Equipment Loans Notes, this Agreement and the
books and records of Agent and the Equipment Loan Lenders. The Term Loans
B and Borrowers' obligation to repay the same shall be evidenced by the
Term B Notes, this Agreement and the books and records of Agent and the
Term Loan B Lenders. The Equipment Facility B Loans and Borrowers'
obligation to repay the same shall be evidenced by the Equipment Facility
B Loans Notes, this Agreement and the books and records of Agent and the
Equipment Loan Lenders. The Term Loans C and Borrowers' obligation to
repay the same shall be evidenced by the Term C Notes, this Agreement and
the books and records of Agent and the Term Loan C Lenders. Agent shall
maintain the Register pursuant to Section 10.13, and a sub-account therein
for each Lender, in which shall be recorded (i) the amount of each Loan
made hereunder, whether each such Loan is a LIBOR Lending Rate Portion, a
Prime Lending Rate Portion or COF Lending Rate Loans, and each Interest
Period, if any, applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from Borrowers to
each Lender hereunder and (iii) both the amount of any sum received by
Agent hereunder from Borrowers and each Lender's share thereof; provided,
however, any failure by Agent to maintain the Register or any such
sub-account with respect to any Loan or continuation, conversion or
payment thereof shall not limit or otherwise affect Borrowers' obligations
hereunder or under the Notes.
2.7 Financial Statements. Subsections (c) and (e) of Section 6.3 of the
Agreement are hereby each amended, effective as of the reporting period ending
July 31, 2006, to substitute therein a covenant by Borrowers to deliver to
Agent, upon its request, internally prepared consolidating trial balance
statements for the covenant that Borrowers deliver annual and quarterly
consolidating financial statements.
2.8 Use of Funds. Subsections (e) and (f) to Section 7.1 of the Agreement
are hereby added as follows:
(e) Use any proceeds of the Term Loans C for any purpose other
than to repay Revolving Loans used to fund the purchase price paid by
Parent for the Dynamic Assets; or
(f) Use any proceeds of the Equipment Facility B Loans for any
purpose other than as provided in Section 2.3.
2.9 Financial Condition. Subsections (b) and (e) of Section 7.15 of the
Agreement are hereby amended to read follows:
(b) the Consolidated Total Liabilities to Consolidated
Effective Tangible Net Worth Ratio, measured as of the end of each fiscal
quarter commencing with the fiscal quarter ending July 31, 2006, at any
time to exceed 1.75:1.00.
(e) the Debt Service Coverage Ratio, measured as of the end of
each fiscal quarter commencing with the fiscal quarter ending July 31,
2006, at any time to be less than 1.25:1.0.
2.10 Replacement of Affected Lenders. The first paragraph of Section 10.16
of the Agreement is amended as follows:
10.16 Replacement of Affected Lenders. If any Lender (other than
Agent) (x) is owed a material amount of increased costs under Section 2.7
or ceases to be obligated to make LIBOR Lending Rate Loans as a result of
the operation of Sections 2.8 or 2.9, (y) refuses to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved pursuant to Section 11.4 by the
Majority Lenders, the Revolving Loan Lenders the Revolving Credit
Commitment Percentage of which aggregate more than 66.67%, the Term Loan
Lenders the Term Loans Commitment Percentage of which aggregate more than
66.67%, the Equipment Loan Lenders the Equipment Loans Commitment
Percentage of which aggregate more than 66.67%, the Term Loan B Lenders
the Term Loans B Commitment Percentage of which aggregate more than
66.67%; the Equipment Facility B Loan Lenders the Equipment Facility B
Loans Commitment Percentage of which aggregate more than 66.67%, or the
Term Loan C Lenders the Term Loans C Commitment Percentage of which
aggregate more than 66.67%; or (z) is in default of its obligations
hereunder, then Agent shall have the right, but not the obligation, to
replace such Lender (the "Replaced Lender") with one or more
Eligible Assignees (collectively, the "Replacement Lender") provided,
that:
2.11 Amendments and Waivers. Sections 11.4 (iv) and (v) of the agreement
are hereby amended as follows:
(iv) amend, modify or waive any provision of this Agreement
regarding the allocation of prepayment amounts to the Term Loans or the
application of such prepayment amounts to the respective installments of
principal under the respective Term Loans without the written consent of
the Term Loan Lenders the Term Loan Commitment Percentages of which
aggregate more than 66.67%; or amend, modify or waive any provision of
this Agreement regarding the allocation of prepayment amounts to the
Revolving Loans or the application of such prepayment amounts to the
respective installments of principal under the respective Revolving Loans
without the written consent of the Revolving Loan Lenders the Revolving
Loan Commitment Percentages of which aggregate more than 66.67%; or amend,
modify or waive any provision of this Agreement regarding the allocation
of prepayment amounts to the Equipment Loans or the application of such
prepayment amounts to the respective installments of principal under the
respective Equipment Loans without the written consent of the Equipment
Loan Lenders the Equipment Loan Commitment Percentages of which aggregate
more than 66.67%; or amend, modify or waive any provision of this
Agreement regarding the allocation of prepayment amounts to the Term Loans
B or the application of such prepayment amounts to the respective
installments of principal under the respective Term Loans B without the
written consent of the Term Loan B Lenders the Term Loan B Commitment
Percentages of which aggregate more than 66.67%; or amend, modify or waive
any provision of this Agreement regarding the allocation of prepayment
amounts to the Equipment Facility B Loans or the application of such
prepayment amounts to the respective installments of principal under the
respective Equipment Facility B Loans without the written consent of the
Equipment Facility B Loan Lenders the Equipment Facility B Loan Commitment
Percentages of which aggregate more than 66.67%; or amend, modify or waive
any provision of this Agreement regarding the allocation of prepayment
amounts to the Term Loans C or the application of such prepayment amounts
to the respective installments of principal under the respective Term
Loans C without the written consent of the Term Loan C Lenders the Term
Loan C Commitment Percentages of which aggregate more than 66.67%; or
(v) subject to clause (i) of this Section 11.4 as it relates
to reducing the amount or extending the scheduled date of maturity of any
Loan or any installment thereof, amend, modify or waive any provision of
(x) Section 2.1 or Section 2.11 (to the extent it relates to Revolving
Loans) without the written consent of Revolving Loan Lenders the Revolving
Loan Commitment Percentages of which aggregate more than 66.67%; or (y)
Section 2.2 or Section 2.11 (to the extent it relates to Term Loans)
without the written consent of Term Loan Lenders the Term Loan Commitment
Percentages of which aggregate more than 66.67%; (z) Section 2.3 or
Section 2.11 (to the extent it relates to
Equipment Loans) without the written consent of Equipment Loan Lenders the
Equipment Loan Commitment Percentages of which aggregate more than 66.67%;
or (aa) Section 2.2 or Section 2.11 (to the extent it relates to Term
Loans B) without the written consent of Term Loan B Lenders the Term Loan
B Commitment Percentages of which aggregate more than 66.67%; (bb) Section
2.3 or Section 2.11 (to the extent it relates to Equipment Facility B
Loans) without the written consent of Equipment Facility B Loan Lenders
the Equipment Facility B Loan Commitment Percentages of which aggregate
more than 66.67%; or (cc) Section 2.2 or Section 2.11 (to the extent it
relates to Term Loans C) without the written consent of Term Loan C
Lenders the Term Loan C Commitment Percentages of which aggregate more
than 66.67%; or
2.12 Amendment to Schedule 1.1C. Schedule 1.1C of the Agreement is hereby
replaced with the Schedule 1.1C attached hereto.
2.13 Amendment to Exhibit 2.11(a). Exhibit 2.11(a) to the Agreement is
hereby appended with the form of Term C Note and Equipment Facility B Loans Note
set forth on the Exhibit 2.11(a) attached hereto.
2.14 Amendment to Schedule 5.9. Schedule 5.9 (Subsidiaries) of the
Agreement is hereby replaced with the Schedule 5.9 attached hereto.
3. Conditions Precedent to Effectiveness of Amendment. The effectiveness
of this Amendment is subject to and contingent upon the fulfillment of each and
every one of the following conditions:
(a) Agent shall have received this Amendment, duly executed by
Borrowers and all Lenders;
(b) Agent shall have received the Term C Notes payable to each
Lender in the amount of such Lender's respective Term Loan C Commitment, duly
executed by Borrowers;
(c) Agent shall have received the Equipment Facility B Loans Notes
payable to each Lender in the amount of such Lender's respective Equipment
Facility B Loan Commitment, duly executed by Borrowers;
(d) Agent shall have received, for the pro rata account of Lenders,
a Term Loan C fee of $5,000, which shall be fully earned and nonrefundable;
(e) Agent shall have received, for the pro rata account of Lenders,
an Equipment Facility B Loan fee of $5,000, which shall be fully earned and
nonrefundable;
(f) No Material Adverse Effect shall have occurred, as determined by
Agent in its reasonable discretion;
(g) No Event of Default, Unmatured Event of Default or Material
Adverse Effect shall have occurred; and
(h) All of the representations and warranties set forth herein, in
the Loan Documents and in the Agreement shall be true, complete and accurate in
all respects as of the date hereof (except for representations and warranties
which are expressly stated to be true and correct as of the Closing Date).
4. Representations and Warranties. In order to induce Agent and Lenders to
enter into this Amendment, each Borrower hereby represents and warrants to Agent
and Lenders that:
(a) No Event of Default or Unmatured Event of Default is continuing;
(b) All of the representations and warranties set forth in the
Agreement and the Loan Documents are true, complete and accurate in all respects
(except for representations and warranties which are expressly stated to be true
and correct as of the Closing Date); and
(c) This Amendment has been duly executed and delivered by
Borrowers, and after giving effect to this Amendment, the Agreement and the Loan
Documents continue to constitute the legal, valid and binding agreements and
obligations of Borrowers, enforceable in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, and similar laws and
equitable principles affecting the enforcement of creditors' rights generally.
5. Counterparts; Telefacsimile Execution. This Amendment may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Amendment. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.
6. Integration. The Agreement as amended by this Amendment constitutes the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and thereof, and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof and thereof.
7. Reaffirmation of the Agreement. The Agreement as amended hereby and the
other Loan Documents remain in full force and effect.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Amendment as of the date first hereinabove written.
NATIONAL TECHNICAL SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx, Senior Vice President,
Chief Financial Officer, Treasurer and
Assistant Secretary
NATIONAL TECHNICAL SYSTEMS dba NATIONAL
TECHNICAL SYSTEMS
By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx, Senior Vice President,
Chief Financial Officer, Treasurer and
Assistant Secretary
XXCAL, INC.
By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx, Vice President, Treasurer
And Assistant Secretary
APPROVED ENGINEERING TEST
LABORATORIES, INC.
By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx, Vice President, Treasurer
And Assistant Secretary
ETCR, INC.
By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx, Vice President, Treasurer
And Assistant Secretary
ACTON ENVIRONMENTAL TESTING
CORPORATION
By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx, Vice President, Treasurer
And Assistant Secretary
PHASE SEVEN LABORATORIES, INC.
By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx, Vice President, Treasurer
And Assistant Secretary
COMERICA BANK, in its capabilities as Agent,
Issuing Lender and a Lenter
By: /s/ Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx, Vice President
FIRST BANK & TRUST, in its capacity as a
Lender
By: /s/ Xxxx Xxxxxx
Xxxx Xxxxxx, Senior Vice President
Schedule 1.1C
Schedule of Commitments
--------------------------------------------------------------------------------------------------------------
Revolving Credit
Revolving Credit ---------------------------------
Revolving Loan Lender --------------------------------------
Commitment Percentage
--------------------------------------- Commitment
--------------------------------------------------------------------------------------------------------------
Comerica $9,900,000 60%
First Bank & Trust $6,600,000 40%
--------------------------------------------------------------------------------------------------------------
Term Loan Commitment
Term Loan Commitment ---------------------------------
Term Loan Lender --------------------------------------
Percenta'e
---------------------------------------
--------------------------------------------------------------------------------------------------------------
Comerica $1,500,000 60%
First Bank & Trust $1,000,000 40%
--------------------------------------------------------------------------------------------------------------
Equipment Loan
Equipment Loan ---------------------------------
Equipment Loan Lender --------------------------------------
Commitment Percentage
--------------------------------------- Commitment
---------------------------------
--------------------------------------
--------------------------------------------------------------------------------------------------------------
Comerica $1,200,000 60%
First Bank & Trust $800,000 40%
--------------------------------------------------------------------------------------------------------------
Term Loan B Commitment
Term Loan B Lender Term Loan B Commitment ---------------------------------
----------------------------------------------------------------------------- Percentage
--------------------------------------------------------------------------------------------------------------
Comerica $2,340,000 60%
First Bank & Trust $1,560,000 40%
--------------------------------------------------------------------------------------------------------------
Equipment Facility B Loan Equipment Facility Loan
Equipment Facility B Loan -----------------------------------------------------------------------
--------------------------------------- Commitment Commitment Percentage
Lender -----------------------------------------------------------------------
---------------------------------------
--------------------------------------------------------------------------------------------------------------
Comerica $1,200,000 60%
First Bank & Trust $800,000 40%
--------------------------------------------------------------------------------------------------------------
Term Loan C Commitment Term Loan C Commitment
Term Loan C Lender -----------------------------------------------------------------------
--------------------------------------- Percentage
--------------------------------------------------------------------------------------------------------------
Comerica $1,200,000 60%
First Bank & Trust $800,000 40%
--------------------------------------------------------------------------------------------------------------
