Exhibit 10.38

 

SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT AND PARTIAL
EXCHANGE AGREEMENT

 

This Sixth Amendment to Second Amended and Restated Credit Agreement and Partial
Exchange Agreement (this “Sixth Amendment”) is made as of June 23, 2004 among
FIREARMS TRAINING SYSTEMS, INC., a Delaware corporation (the “Parent”), FATS,
INC., a Delaware corporation (the “Borrower”), the financial institutions listed
on the signature pages hereof (the “Lenders”) and BANK OF AMERICA, N.A., as
Agent and Issuing Bank (the “Agent”).

 

RECITALS

 

A. The Parent, the Borrower, the Lenders and the Agent are parties to the Second
Amended and Restated Credit Agreement and Partial Exchange Agreement dated as of
April 1, 2000, the First Amendment to Second Amended and Restated Credit
Agreement and Partial Exchange Agreement dated as of December 31, 2001, the
Second Amendment to Second Amended and Restated Credit Agreement and Partial
Exchange Agreement dated as of March 29, 2002, the Third Amendment to Second
Amended and Restated Credit Agreement and Partial Exchange Agreement dated as of
July 10, 2002, the Fourth Amendment to Second Amended and Restated Credit
Agreement and Partial Exchange Agreement dated as of March 14, 2003 and the
Fifth Amendment to Second Amended and Restated Credit Agreement and Partial
Exchange Agreement dated as of June 26, 2003 (as amended, the “Credit
Agreement”). All terms used but not defined herein shall have the meanings given
them in the Credit Agreement.

 

B. The Parent and the Borrower have requested that the Lenders amend certain
provisions of the Credit Agreement to extend the maturity date of the Senior
Secured Loans, the Junior Secured Loans, the New Revolving Loans and the Letters
of Credit from October 15, 2004 to October 15, 2005.

 

C. The Lenders have agreed to the requested amendment on the terms and
conditions of this Sixth Amendment.

 

AGREEMENT

 

The parties hereto agree as follows:

 

Section 1. Mandatory Prepayments.

 

(a) Section 2.12(h) is amended to read in its entirety as follows:

 

“(h) The Borrower shall make all necessary prepayments of principal on the
Senior Secured Notes in a timely manner to ensure that the amount outstanding
under the Senior Secured Notes shall at no time exceed the applicable Senior
Secured Loans Amount. To the extent not previously paid, the Borrower shall
prepay the amount due under the Senior Secured Notes as follows:

 

(i) $400,000 on December 30, 2003;

 

(ii) $500,000 on June 29, 2004;

 

(iii) $2,000,000 on the earlier of (x) August 30, 2004 or (y) one Business Day
after the Borrower receives the Carabinieri Receivables;

 

(iv) $400,000 on December 31, 2004; and

 

(v) $1,100,000 on June 30, 2005.

 

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(b) The following defined term is hereby added to the Credit Agreement in
appropriate alphabetical order:

 

“Carabinieri Receivables” shall mean an amount equal to approximately $9,453,659
expected to be received by the Borrower from Carabinieri on or about August 1,
2004.

 

Section 2 Loan Maturity. The following defined terms are amended to read in
their entirety as follows:

 

“Junior Secured Loans Maturity Date” shall mean October 15, 2005

 

“New Revolving Credit Maturity Date” shall mean October 15, 2005

 

“Senior Secured Loans Maturity Date” shall mean October 15, 2005

 

Section 3 Amendment Fee. The Borrower shall pay to the Agent, for the account of
the Lenders, a nonrefundable amendment fee with respect to each Senior Secured
Note, Junior Secured Note, New Revolving Credit Note and Letter of Credit that
has had its maturity date extended pursuant to this Sixth Amendment in an amount
equal to the Dollar Amount of the face amount of such Senior Secured Note,
Junior Secured Note, New Revolving Credit Note and Letter of Credit multiplied
by a percentage equal to 1% (collectively, the “Amendment Fee”). Such fees shall
be payable to the Lenders on September 30, 2004 to be shared ratably among them
in accordance with their respective Applicable Percentages.

 

Notwithstanding the foregoing, in the event that the Credit Agreement has been
terminated and all Obligations thereunder have been paid in full prior to
September 30, 2004, the Amendment Fee shall be reduced by 50% and shall be
payable to the Lenders on the date the Credit Agreement is terminated and all
Obligations thereunder are paid in full.

 

Section 4. Representations and Warranties. The Parent and the Borrower hereby
represent and warrant to the Lenders and the Agent, as follows:

 

(a) The representations and warranties set forth in Article III of the Credit
Agreement, and in each other Loan Document, including any Schedules thereto, are
true and correct in all material respects on and as of the date hereof with the
same effect as if made on and as of the date hereof, except to the extent such
representations and warranties expressly relate solely to an earlier date.

 

(b) Each of the Parent, the Borrower and the other Loan Parties is in compliance
with all the terms and conditions of the Credit Agreement and the other Loan
Documents on its part to be observed or performed and no Default or Event of
Default has occurred or is continuing under the Credit Agreement.

 

(c) The execution, delivery and performance by the Parent and the Borrower of
this Sixth Amendment have been duly authorized by the Parent and the Borrower.

 

(d) This Sixth Amendment constitutes the legal, valid and binding obligation of
the Parent and the Borrower, enforceable against them in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance, voidable preference or similar
laws and the application of equitable principles generally.

 

(e) The execution, delivery and performance by the Parent and the Borrower of
this Sixth Amendment (i) do not conflict with or violate (A) any provision of
law, statute, rule or regulation, or of the articles of incorporation or by-laws
of the Parent or the Borrower, (B) any order of any Governmental Authority or
(C) any provision of any indenture, agreement or other instrument to which the
Parent or the Borrower is a party or by which either of them or any of their
property may be bound and (ii) does not require any consents under, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default or give rise to increased, additional, accelerated or guaranteed rights
of any person under any such indenture, agreement or instrument.

 

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Section 5. Effectiveness. This Sixth Amendment shall become effective upon
satisfaction of the following conditions precedent:

 

(a) The Agent shall have received duly executed counterparts of this Sixth
Amendment which, when taken together, bear the authorized signatures of the
Parent, the Borrower and each of the Lenders.

 

(b) The Lenders shall be satisfied that the representations and warranties set
forth in Section 4 hereof are true and correct on and as of the date hereof.

 

(c) There shall not be any action pending or any judgment, order or decree in
effect which, in the judgment of the Lenders or their counsel, is likely to
restrain, prevent or impose materially adverse conditions upon performance by
the Parent, the Borrower or any other Loan Party of its obligations under the
Loan Documents.

 

(d) The Lenders shall have received such other documents, legal opinions,
instruments and certificates as they shall reasonably request, and such other
documents, legal opinions, instruments and certificates shall be satisfactory in
form and substance to the Lenders and their counsel. All corporate and other
proceedings taken or to be taken in connection with this Sixth Amendment and all
documents incidental thereto, whether or not referred to herein, shall be
satisfactory in form and substance to the Lenders and their counsel.

 

Section 6. Reference to and Effect on the Credit Agreement. Except as
specifically amended, waived, modified and agreed to above, the Credit Agreement
shall continue to be in full force and effect and is hereby in all respects
ratified and confirmed.

 

Section 7. Governing Law. This Sixth Amendment shall be construed in accordance
with and governed by the laws of the State of New York.

 

Section 8. Counterparts. This Sixth Amendment may be executed in any number of
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one agreement. Delivery by facsimile by any
of the parties hereto of an executed counterpart of this Sixth Amendment shall
be as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered,
but the failure to deliver a manually executed counterpart shall not affect the
validity, enforceability or binding effect of this Sixth Amendment.

 

[END OF PAGE]

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment to be
duly executed by their duly authorized officers, all as of the date first above
written.

 

FIREARMS TRAINING SYSTEMS, INC.

as Parent

By:        

Name:

   

Title:

 

FATS, INC.

as Borrower

By:        

Name:

   

Title:

 

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NON CENTRE ENTITIES

 

BANK OF AMERICA, N.A., as Agent and Issuing Bank By:        

Name:

   

Title:

 

BANC OF AMERICA STRATEGIC SOLUTIONS, INC., as a Lender By:        

Name:

   

Title:

 

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U.S. BANK NATIONAL ASSOCIATION

By:        

Name:

   

Title:

 

SPECIAL SITUATIONS OPPORTUNITY FUND I, LLC, by First Source Financial, Inc., its
Agent/Asset Manager By:        

Name:

   

Title:

 

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CENTRE ENTITIES, individually and as Lenders

 

CENTRE CAPITAL INVESTORS II, L.P. CENTRE CAPITAL TAX-EXEMPT INVESTORS II, L.P.

CENTRE CAPITAL OFFSHORE INVESTORS II, L.P.

By:   Centre Partners II, L.P., as General Partner By:   Centre Partners
Management LLC, as Attorney-in-Fact By:         Managing Director

 

CENTRE PARTNERS COINVESTMENT, L.P.

By:  

Centre Partners II LLC, as General Partner

By:         Managing Director

 

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