AMENDMENT NUMBER NINE TO REVOLVING CREDIT
AGREEMENT
This
AMENDMENT NUMBER NINE TO REVOLVING CREDIT AGREEMENT (this “
Amendment ”), dated as of December 5, 2007, 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 ”), PHASE SEVEN LABORATORIES, INC., a
California corporation (“ Phase Seven ”), and
UNITED STATES TEST LABORATORY, L.L.C., a Kansas limited liability
company (“ USTL ”), 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, USTL 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 (other than
USTL), 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, that certain Amendment Number Six to Revolving Credit
Agreement, dated as of March 29, 2006, that certain Amendment
Number Seven to Revolving Credit Agreement, dated as of September
21, 2006, and that certain Amendment Number Eight to Revolving
Credit Agreement, dated as of September 26, 2007 (as so amended,
the “ Agreement ”);
B.
Borrowers (other than
USTL) 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.
Concurrent herewith, USTL
is executing and delivering an Addendum to Revolving Credit
Agreement and an Addendum to Security Agreement in order to become
a Borrower under the Agreement and the Security Agreement;
and
D.
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
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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.
Consent .
Borrowers have informed Agent and Lenders that Parent intends to
purchase, directly or indirectly, one hundred percent (100%) of the
membership interests of USTL (the “ Acquisition
”). In connection with the Acquisition, Parent and, if
applicable, its designee will owe certain earnout obligations to
the sellers of USTL (the “ Earnout ”). Borrowers
have therefore requested that the Lenders consent to the
Acquisition and the Earnout. Notwithstanding any term or provision
of the Agreement to the contrary, the Lenders hereby consent to the
Acquisition and the Earnout, and agree that the Acquisition and the
Earnout shall not cause an Event of Default. The consent set forth
herein shall be limited precisely as written and shall not be
deemed to be (i) an amendment, waiver, consent, or modification of
any other term or condition of the Agreement, or (ii) prejudice any
right or remedy which the Lenders may now or in the future have
under or in connection with the Agreement.
3.
Amendments to the Agreement .
3.1
Borrowers . All references to “ Borrowers
” in the Agreement shall include USTL.
3.2
Definitions .
(a) The
following definitions set forth in Section 1.1 of the Agreement are
hereby amended in their entirety as follows:
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“
Amendment Date ” means the date when all of the
conditions set forth in Section 4 of Amendment No. 9 have been
fulfilled to satisfaction of Agent and counsel.
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“
Borrowing ” means a borrowing of Revolving Loans from
the Revolving Loan Lenders pursuant to the terms and conditions
hereof.
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“
Commitment ” means a Lender’s Revolving Credit
Commitment, Term Loan A Commitment and/or Term Loan B Commitment,
as the context requires.
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“
COF Lending Rate ” means the sum of the COF (as of the
date on which the Fixed Rate Portion of the Term Loans A has been
converted to the COF Lending Rate Loans pursuant to
Borrowers’ exercise of their option under
Section 2.4(a)(ii)) plus two and one-quarter percentage points
(225 basis points).
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“
COF Lending Rate Loans ” means the Fixed Rate Portion
of the Term Loans A if the Borrowers have elected to convert such
Loans to bear interest at the COF Lending Rate pursuant to
Section 2.4(a)(ii).
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“
Excluded Subsidiaries ” means, all Subsidiaries of
Borrowers that: (i) are not organized under the laws of any state
or any territory of the United States of America, or any province
or any territory of Canada, or (ii) are not wholly owned
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by any Borrower or any Subsidiary, including but not limited to
XXCAL, Limited, a corporation organized under the laws of the
United Kingdom, XXCAL, Japan K.K, a corporation organized under the
laws of Japan, National Quality Assurance, Inc., a Massachusetts
corporation, NQA Laboratory Services, Inc., a Massachusetts
corporation, NQA-USA, a Massachusetts corporation, NQA Training and
Development, Inc., a Massachusetts corporation, and National
Technical Systems Certifications Services, a Delaware
corporation.
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“
Fees ” means the Facility Fee, the Late Payment Fee,
the Letter of Credit Fees and the Audit Fees.
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“
Interest Payment Date ” means:
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(i) with
respect to each Prime Lending Rate Portion, the last day of each
and every quarter commencing the last such day after the making of
such Loan, and the Revolving Loans Maturity Date (in the case of
the Revolving Loans), the Term Loans A Maturity Date (in the case
of the Term Loans A), and the Term Loans B Maturity Date (in the
case of the Term Loans B).
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(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
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(iii) with
respect to the COF Lending Rate Loans, the last day of each and
every quarter, and the Term Loans A Maturity Date.
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“
Letter of Credit Sublimit ” means Five Hundred
Thousand Dollars ($500,000).
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“
LIBOR Lending Rate Margin ” means (a) with respect to
all Revolving Loans, two percentage points (200 basis points), and
(b) with respect to the Term Loans A and the Term Loans B, two and
one-quarter percentage points (225 basis points).
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“
Loans ” means the Revolving Loans, the Term Loans A
and the Term Loans B (each, a “ Loan
”).
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“
Notes ” means, collectively, the Revolving Notes, the
Term A Notes and the Term B Notes (each, a “ Note
”).
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“
Prepayment Amount ” means:
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(i) If
the Prepaid Principal Amount exceeds $750,000, then the Prepayment
Amount is the sum of: (x) the Prepaid Principal Amount;
(y) interest accruing on the Prepaid Principal Amount up to,
but not including, the Prepayment Date; (z) $500;
plus the present value, discounted at the
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Reinvestment Rates of the positive amount by which (A) the
interest the Term Loan A Lenders would have earned had the Prepaid
Principal Amount not been paid prior to the Term Loans A Maturity
Date at the COF Lending Rate, exceeds (B) the interest the
Term Loan A Lenders would earn by reinvesting the Prepaid Principal
Amount at the Reinvestment Rates.
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(ii) If
the Prepaid Principal Amount is $750,000 or less, then the
Prepayment Amount is the sum of: (x) the Prepaid Principal
Amount; (y) interest accruing on the Prepaid Principal Amount
up to, but not including, the Prepayment Date; plus (z) an amount
equal to two percent (2%) of the Prepaid Principal
Amount.
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“
Revolving Loans Maturity Date ” means December 1,
2012.
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“
Total Commitment Percentage ” means, with respect to
any Lender, the percentage equal to sum of such Lender’s
Revolving Loan Commitment, Term Loan A Commitment and Term Loan B
Commitment, divided by the Total Credit.
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“
Total Credit ” means $38,150,000.
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“
Interest Period ” means, with respect to each LIBOR
Lending Rate Portion, the period commencing on the date of such
LIBOR Lending Rate Portion and ending on the numerically
corresponding day one (1), two (2), three (3), four (4), five (5),
six (6) or twelve (12) months thereafter as Parent or any Borrower
may elect pursuant to the applicable Notice of Borrowing or Notice
of Conversion or Continuation; provided , however ,
that:
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(i) any
Interest Period which would otherwise end on a day which is not a
LIBOR Business Day shall be extended to the next succeeding LIBOR
Business Day unless such LIBOR Business Day falls in another
calendar month in which case such Interest Period shall end on the
immediately preceding LIBOR Business Day;
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(ii) any
Interest Period which begins on the last LIBOR Business Day of the
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last LIBOR Business Day of the
calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month;
and
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(iii) no
Interest Period respecting a Revolving Loan may extend beyond the
Revolving Loans Maturity Date, no Interest Period respecting the
Term Loans A may extend beyond the Term Loans A Maturity Date and
no Interest Period respecting the Term Loans B may extend beyond
the Term Loans B Maturity Date.
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(b) The
following definitions are hereby added to Section 1.1 of the
Agreement in alphabetical order:
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“
118 Acre Parcel ” has the meaning given to such terms
in Section 6.16.
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“
118 Acre Parcel Sale ” means the sale of the 118 Acre
Parcel.
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“
118 Acre Parcel Sale Proceeds ” means the proceeds
received from the 118 Acre Parcel Sale in an amount equal to the
greater of (i) $13,500,000, or (ii) the sale price of the 118 Acre
Parcel, net of taxes and documented out-of-pocket costs and
expenses incurred in connection with such sale, including, without
limitation, expenses related to moving Borrowers’ equipment
off the 118 Acre Parcel and otherwise preparing the 118 Acre Parcel
for sale, if higher.
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“
25 Acre Parcel ” has the meaning given to such terms
in Section 6.16.
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“
Adjusted Working Capital ” means the amount calculated
as (a) the consolidated current assets of Borrowers, minus (b) the
amount of cash and cash equivalents included in such consolidated
current assets, minus (c) the consolidated current liabilities of
Borrowers (for purposes of this calculation the amount of Revolving
Loans shall be included in consolidated current
liabilities).
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“
Amendment No. 9 ” means that certain Amendment Number
Nine to Revolving Credit Agreement, dated as of November 28, 2007,
among Borrowers, Agent and Lenders.
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“
Boxborough Real Estate ” means the commercial real
estate owned by ETCR and located at 1146 Massachusetts Avenue,
Boxborough, Massachusetts 01719.
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“
Boxborough Real Estate Sale ” means the sale of the
Boxborough Real Estate.
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“
Boxborough Real Estate Sale Proceeds ” means the
proceeds received from the Boxborough Real Estate Sale in an amount
equal to the greater of (i) $1,312,500, or (ii) the sale price of
the Boxborough Real Estate, net of taxes and documented
out-of-pocket costs and expenses incurred in connection with such
sale, if higher.
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“
Consolidated EBITDA ” means, with respect to any
period, the sum of (without duplication) (i) Consolidated Net
Income for such period (excluding extraordinary gains and losses);
(ii) Consolidated Interest Expense during such period; (iii)
accrued federal and state income taxes payable by each Borrower and
the Subsidiaries during such period which are included in the
determination of Consolidated Net Income; (iv) each
Borrower’s and the Subsidiaries’ consolidated
depreciation and amortization during such period; in each case
calculated in accordance with GAAP; and (v) non-cash stock options
expenses (it being understood that the foregoing shall include USTL
for all applicable measurement periods prior to the consummation of
the USTL Acquisition).
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“
Consolidated Interest Expense ” means, with respect to
any period, the current interest accrued during such period in
accordance with GAAP on the aggregate amount of each
Borrower’s and the Subsidiaries’ consolidated Debt,
including the interest portion of each Borrower’s and the
Subsidiaries’ consolidated Capital Lease
Obligations.
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“
Consolidated Net Income ” means, with respect to any
period, the consolidated net income of Borrowers and the
Subsidiaries after all federal, state and local income taxes
reflected on Borrowers’ Financial Statement for such period,
calculated in accordance with GAAP.
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“
Excess Cash Flow ” means, for the applicable fiscal
year of Borrowers, the result of (i) Consolidated Net Income, plus
(ii) to the extent deducted from Consolidated Net Income, each
Borrower’s consolidated depreciation, amortization and
non-cash stock option expenses during such fiscal year, plus any
decrease or minus any increase, as applicable, in (iii) Adjusted
Working Capital for such fiscal year, minus (iv) the sum of (a)
unfinanced Capital Expenditures made during such fiscal year up to
the applicable amount set forth in Section 7.12, (b) all regularly
scheduled payments of principal made on Funded Debt (excluding the
Revolving Loans and any other revolving Funded Debt) during such
fiscal year, and (c) the amount of any optional prepayments made on
the Term Loans A and the Term Loans B during such fiscal year
(excluding the proceeds of Permitted Real Estate Sales applied as
permanent reductions to the Term Loans A and the Term Loans B); in
each case calculated in accordance with GAAP.
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“
Funded Debt ” means each Borrower’s (i)
indebtedness heretofore or hereafter created, issued, incurred or
assumed for or in respect of money borrowed; (ii) Capital Lease
Obligations; and (iii) obligations evidenced by bonds, debentures,
notes, or other similar instruments.
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“
Interest Only End-Date ” means December 5,
2008.
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“
Fixed Charge Coverage Ratio ” means as of the last day
of each fiscal quarter, the ratio of: (i) Consolidated EBITDA for
the four fiscal quarter period ending on such day, minus unfinanced
Capital Expenditures, dividends, and all federal, state and local
taxes paid by each Borrower and the Subsidiaries during the four
fiscal quarter period ending on such day); to (ii) the sum of (1)
the current portion (other than interest) of Borrowers’ and
the Subsidiaries’ consolidated long-term Debt, (2) the
current portion of Capital Lease Obligations of each Borrower and
the Subsidiaries (exclusive of the interest portion), and (3)
Consolidated Interest Expense, in each case for the four fiscal
quarter period ending on such day; in each case calculated in
accordance with GAAP.
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“
Fixed Rate Portion ” means one-half of the outstanding
balance of the Term Loans A that Borrowers have elected to convert
to the COF Lending Rate Loans pursuant to Borrowers’ exercise
of their option under Section 2.4(a)(ii).
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“
Permitted Real Estate Sales ” means, collectively, the
Boxborough Real Estate Sale and the 118 Acre Parcel
Sale.
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“
Pre-Existing Term Debt ” means, collectively, all
outstanding term debt owed by the Borrowers to Lenders under the
Agreement immediately before the Amendment Date and
Borrowers’ real estate loan from GE Capital respecting the
Boxborough Real Estate and outstanding immediately before the
Amendment Date.
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“
Saugus Real Estate ” means, collectively, the 118 Acre
Parcel and the 25 Acre Parcel.
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“
Term Loan A Commitment ” means, with respect to any
Term Loan A Lender, the amount indicated opposite such
Lender’s name on Schedule 1.1C under the heading Term
Loan A 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 A Commitment assigned to such
assignee Lender (collectively, the “ Term Loan A
Commitments ”).
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“
Term Loan A Commitment Percentage ” means, with
respect to any Term Loan A Lender, the percentage indicated on
Schedule 1.1C under the heading Term Loan A 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 A Commitment assigned to such assignee
Lender.
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“
Term Loan A Lender ” means each of the Lenders
indicated on Schedule 1.1C under the heading Term Loan A Lenders,
and also means any assignee of such Lender pursuant to
Section 11.5(c).
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“
Term Loans A Maturity Date ” means December 1,
2012.
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“
Term A 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 A.
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“
Term Loan B Commitment ” means, with respect to any
Term Loan B Lender, the amount indicated opposite such
Lender’s name on Schedule 1.1C under the heading Term
Loan B 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 B Commitment assigned to such
assignee Lender (collectively, the “ Term Loan B
Commitments ”).
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“
Term Loan B Commitment Percentage ” means, with
respect to any Term Loan B Lender, the percentage indicated on
Schedule 1.1C under the heading Term Loan B 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 B Commitment assigned to such assignee
Lender.
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“
Term Loan B Lender ” means each of the Lenders
indicated on Schedule 1.1C under the heading Term Loan B Lenders,
and also means any assignee of such Lender pursuant to
Section 11.5(c).
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“
Term Loans B Maturity Date ” means December 1,
2012.
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“
Term B 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 B.
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“
USTL ” means United States Test Laboratory, L.L.C., a
Kansas limited liability company.
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“
USTL Acquisition ” means the acquisition by Parent (or
its designee) of the membership interests in USTL.
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(c) The
following definitions are hereby deleted from Section 1.1 of the
Agreement without replacement: “Amendment No. 5”;
“Consolidated Total Liabilities to Consolidated Effective
Tangible Net Worth Ratio”; “Current Liabilities”;
“Debt Service Coverage Ratio”; “Dynamic
Assets”; “Equipment”; “Equipment Facility B
Loan Commitment”; Equipment Facility B Loan Commitment
Percentage”; “Equipment Facility B Loan Lender”;
“Equipment Facility B Loans”; “Equipment
Facilities B Loans Conversion Date”; “Equipment
Facility B Loans Maturity Date”; “Equipment Facility B
Loans Notes”; “Equipment Fee”; “Equipment
Loan Commitment”; Equipment Loan Commitment
Percentage”; “Equipment Loan Lender”;
“Equipment Loans”; “Equipment Loans Conversion
Date”; “Equipment Loans Maturity Date”;
“Equipment Loans Notes”; “Hoffman”;
“Hoffman Employment Agreement”; “Hoffman
Stock”; “Quick Ratio”; “Term Loan C
Commitment”; “Term Loan C Commitment Percentage”;
“Term Loan C Lender”; “Term Loans C Maturity
Date”; “Term C Notes”; “Term Loan
Commitment”; “Term Loan Commitment Percentage”;
“Term Loan Lender”; “Term Loans Maturity
Date”; and “Term Notes”.
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3.3 Term Loans A .
Section 2.2 of the Agreement is hereby amended in its entirety as
follows:
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2.2
Term Loans A .
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(a)
Several Term Loans . Subject to the terms and conditions
hereof, each Term Loan A Lender severally agrees to make a term
loan (each a “ Term Loan A ” and collectively
the “ Term Loans A ”) to Borrowers on the
Amendment Date in an amount equal to each such Term Loan A
Lender’s Term Loan A Commitment, the proceeds of which shall
be used for the purposes allowed in Section 7.1(b). Each Term Loan
A Lender shall make the amount of such Lender’s Term Loan A
available to Agent in same day funds, not later than 9:00 a.m.
(Pacific time), on the Amendment Date, or as soon as practicable
thereafter. After Agent’s receipt of the proceeds of the Term
Loans A, Agent shall disburse the Term Loans A as directed pursuant
to written disbursement instructions provided by
Borrowers.
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(b)
Amortization . Borrowers shall pay twenty (20) quarterly
principal reduction payments on the Term Loans A, each in the
aggregate amount of $321,428.57. Each such payment shall be due and
payable on the last day of each quarter commencing February 28,
2008 and continuing on the last day of each succeeding quarter. On
the Term Loans A Maturity Date, the outstanding principal balance,
and all accrued and unpaid interest under the Term Loans A shall be
due and payable in full.
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(c)
Prepayments . Borrowers may prepay the Term Loans A 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 and Section 2.16
with respect to prepayments of COF Lending Rate Loans. 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 A Lender. Upon receipt of any such
notice of a prepayment, Agent shall promptly notify each Term Loan
A Lender thereof. Agent shall, promptly following its receipt of
any payment or prepayment of the Term Loans A, distribute to each
Term Loan A 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 A Lender’s
respective account. All prepayments shall be applied toward
scheduled principal reduction payments owing under this Section 2.2
in inverse order of maturity.
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3.4 Term Loans B .
Section 2.3 of the Agreement is hereby amended in its entirety as
follows:
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2.3
Term Loans B .
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(a)
Several Term Loans B . Subject to the terms and conditions
hereof, each Term Loan B Lender severally agrees to make a term
loan (each a “ Term Loan B ” and collectively
the “ Term Loans B ”) to Borrowers on the
Amendment Date in an amount equal to each such Term Loan B
Lender’s Term Loan B Commitment, the proceeds of which shall
be used for the purposes allowed in Section 7.1(c). 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 the Amendment Date, or as soon as practicable
thereafter. After Agent’s receipt of the proceeds of the Term
Loans B, Agent shall disburse the Term Loans B as directed pursuant
to written disbursement instructions provided by
Borrowers.
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(b)
Amortization . From the Amendment Date until the Interest
Only End-Date, no principal payments shall be due on the
outstanding Term Loans B; provided that Borrowers shall make
interest payments thereon during such period in accordance with
Section 2.4. Following the Interest Only End-Date, Borrowers
shall pay quarterly principal reduction payments on the
Term
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Loans B in the amounts and for the periods set out in the below
table. Each such payment shall be due and payable on the last day
of each quarter commencing February 28, 2009 and continuing on the
last day of each succeeding quarter. On the Term Loans B Maturity
Date, the outstanding principal balance, and all accrued and unpaid
interest under the Term Loans B shall be due and payable in
full.
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Periods
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Amounts
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Years 2-5 of the Term of Term Loan B
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Quarterly Principal Payment
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2/28/09 - 11/30/09
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$158,125
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2/28/10 - 11/30/10
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$316,250
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2/28/11 - 11/30/11
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$474,375
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2/29/12 - 11/30/12
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$474,375
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(c)
Prepayments . Borrowers may prepay the Term Loans B 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 B Lender.
Upon receipt of any such notice of a prepayment, Agent shall
promptly notify each Term Loan B Lender thereof. Agent shall,
promptly following its receipt of any payment or prepayment of the
Term Loans B, distribute to each Term Loan B 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 Term
Loan B Lender’s respective account. All prepayments shall be
applied toward scheduled principal reductions payments owing under
this Section 2.3 in inverse order of maturity.
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3.5
Interest Rates . Section 2.4(a) of the Agreement is hereby
amended in its entirety as follows:
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(a)
Interest Rate Options .
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(i)
Revolving Loans . Subject to the terms and conditions
hereof, all Revolving Loans, 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 Revolving Loans; provided , however , there shall
be no more than three (3) LIBOR Lending Rate Portions of Revolving
Loans outstanding at any time. LIBOR Lending Rate Portions shall be
in minimum
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amounts each of 1,000,000.
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(ii)
Term Loans A . Subject to the terms and conditions hereof,
the Term Loans A, 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 A;
provided , however , there shall be no more than
three (3) LIBOR Lending Rate Portions of the Term Loans A
outstanding at any time. LIBOR Lending Rate Portions of the Term
Loans A shall be in minimum amounts each of $1,000,000;
provided , further , as soon as possible, but in no
event more than ninety (90) days following the Amendment Date,
Borrowers shall have the option upon three (3) Business Days’
prior written notice to Agent, to either (1) convert one-half of
the outstanding balance of the Term Loans A (i.e., the Fixed Rate
Portion of the Term Loans A) to COF Lending Rate Loans or (2) enter
into an interest rate swap agreement in form and substance
satisfactory to the Term Loan A Lenders with respect to the Fixed
Rate Portion of the Term Loans A. If Borrowers fail to exercise
such option, the Term Loans A shall continue to be outstanding as
either Prime Lending Rate Portions or LIBOR Lending Rate Portions
in accordance with this clause (ii). Once the Fixed Rate Portion of
the Term Loans A has been converted to the COF Lending Rate Loans
pursuant to this clause (ii), such COF Lending Rate Loans may not
be converted back to Prime Lending Rate Portions or LIBOR Lending
Rate Portions.
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(iii)
Term Loans B . Subject to the terms and conditions hereof,
the Term Loans B, 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 B;
provided , however , there shall be no more than
three (3) LIBOR Lending Rate Portions of Term Loans B outstanding
at any time. LIBOR Lending Rate Portions of Term Loans B shall be
in minimum amounts each of $1,000,000.
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3.6
Notice of Borrowing Requirements . Section 2.5(b) of the
Agreement is hereby amended in its entirety as follows:
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(b) Each
Borrowing shall be made upon telephonic notice given by a
Responsible Officer of Borrowers, followed by a Notice of
Borrowing, given by facsimile or personal service, delivered to
Agent at the address set forth in the Notice of Borrowing. If for a
Prime Lending Rate Portion, Agent shall be given such notice no
later than 11:00 a.m., Pacific time, one (1) Business Day
prior to the day on which such Borrowing is to be made, and, if for
a LIBOR Lending Rate Portion, Agent shall be given notice no later
than 9:00 a.m., Pacific time, three (3) LIBOR Business Days
prior to the day on which such Borrowing is to be made, and such
notice shall state the amount and purpose thereof (subject to the
provisions of Section 2.1). Upon receipt of any Notice of
Borrowing from
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Borrowers, (x) Agent shall promptly notify each Revolving Loan
Lender thereof, (y) each Revolving Loan Lender will make the amount
of its pro rata share of each Borrowing available to Agent for the
account of Borrowers at Agent’s Lending Office for such Loans
prior to 10:00 a.m., Pacific time, on the date requested by
Borrowers in funds immediately available to Agent and (z) such
Borrowing will then be made available to Borrowers by Agent
crediting the account of Borrowers on the books of such Lending
Office with the aggregate of the amounts made available to Agent by
Revolving Loan Lenders, and in like funds as received by the
Agent.
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3.7
Conversion or Continuation Requirements . Section 2.6(a) of
the Agreement is hereby amended in its entirety as
follows:
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(a) Parent
shall have the option to: (i) convert, at any time, all or any
portion of any of the outstanding Loans, subject to the
requirements of Section 2.4(a), from a portion bearing
interest at one of the interest rate options available pursuant to
Section 2.4(a) to another; or (ii) upon the
expiration of any Interest Period applicable to a LIBOR
Lending Rate Portion, to continue all or any portion of such LIBOR
Lending Rate Portion as a LIBOR Lending Rate Portion with the
succeeding Interest Period(s) of such continued LIBOR Lending Rate
Portion commencing on the expiration date of the Interest Period
previously applicable thereto; provided ,
however , that a LIBOR Lending Rate Portion may only be
converted to a Prime Lending Rate Portion or continued as a LIBOR
Lending Rate Portion on the expiration date of the Interest Period
applicable thereto; provided further , however
, that no outstanding Loan, or portion thereof, may be continued
as, or be converted into, a LIBOR Lending Rate Portion in the event
that, on the earlier of the date of the delivery of the Notice of
Conversion or Continuation or the telephonic notice in respect
thereof, any Event of Default or Unmatured Event of Default has
occurred and is continuing; provided further ,
however , that if Parent fails to deliver the appropriate
Notice of Conversion or Continuation or the telephonic notice in
respect thereof pursuant to the required notice period before the
expiration of the Interest Period of a LIBOR Lending Rate Portion,
such LIBOR Lending Rate Portion shall automatically be converted to
a Prime Lending Rate Portion; provided further ,
however , that no outstanding portion of a Loan may be
continued as, or be converted into, a LIBOR Lending Rate Portion in
the event that, after giving effect to any such conversion or
continuation, there would be more than nine (9) LIBOR Lending Rate
Portions outstanding. If Borrowers elect to convert the Fixed Rate
Portion of the Term Loans A to the COF Lending Rate Loans pursuant
to Section 2.4(a)(ii), such COF Lending Rate Loans may not be
converted back into Prime Lending Rate Portions or LIBOR Lending
Rate Portions.
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3.8
Notes . Sections 2.11(a) and (b) of the Agreement are hereby
amended in its entirety as follows:
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(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 the date
of
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such 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 A Note and/or Term B 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 A
Commitment and/or Term Loan B 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.
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(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 A and Borrowers’ obligation to repay the same shall be
evidenced by the Term A Notes, this Agreement and the books and
records of Agent and the Term Loan A 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. 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 the 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.
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3.9
Mandatory Principal Reductions . Section 2.14 of the
Agreement is hereby amended in its entirety as follows:
2.14
Mandatory Principal Reductions .
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(a)
Asset Sales . Each Borrower shall pay to Agent for the
account of the Lenders, on the first Business Day following such
Borrower’s receipt thereof, one hundred percent (100%) of the
Net Cash Proceeds derived from each and all of its Asset Sales
other than Permitted Real Estate Sales; provided that so
long as no Event of Default has occurred and is continuing,
Borrowers shall be permitted to retain the Net Cash Proceeds
derived from (i) the Permitted Asset Sales, and (ii) any
other Asset Sales, other than the Permitted Real Estate Sales, not
to exceed $300,000 in any transaction or series of transactions or
$500,000 in the aggregate in any fiscal year of Parent;
provided , however , in accordance with Section 7.7,
Borrowers shall not conduct or
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