EXHIBIT 10.1

May 29, 2002

Attention: Hugh Regan
inTEST Corporation
inTEST Sunnyvale Corporation
Temptronic Corp.
inTEST Investments, Inc.
inTEST Licensing Corp.
inTEST IP Corp.
Seven Esterbrook Lane
Cherry Hill, NJ 08003

Re: $5,000,000 Committed Line of Credit

Dear Hugh:

We are pleased to inform you that PNC Bank, National Association (the "Bank")
has reapproved your request for the renewal and restatement of the committed
line of credit extended to inTEST Corporation ("InTEST"), inTEST Sunnyvale
Corporation, Temptronic Corporation, inTEST Investments, Inc., inTEST IP Corp.
and inTEST Licensing Corp. (each, a "Borrower" and collectively, the
"Borrowers"). This letter agreement (this "Letter Agreement") amends, restates
and replaces (but does not constitute a novation of or affect the status of any
liens or security interests granted pursuant to) the existing Letter Agreement,
dated November 16, 2000, by and among the Bank and the Borrowers (the "Existing
Letter Agreement"). We look forward to this opportunity to help you meet the
financing needs of your business. All the details regarding your Line of Credit
(as defined herein) are outlined in the following sections of this Letter
Agreement.

Facility and Use of Proceeds

. This is a committed revolving line of credit under which the Borrowers may
request, and the Bank, subject to the terms and conditions of this Letter
Agreement, will make, advances (
"Advances"
) to the Borrowers from time to time until the Expiration Date, in an amount in
the aggregate at any time outstanding not to exceed $5,000,000 (the
"Line of Credit"
or the
"Loan"
). The
"Expiration Date"
means February 28, 2004, or such later date as may be designated by the Bank by
written notice to the Borrowers. Advances under the Line of Credit will be used
for working capital or other general business purposes of the Borrowers.

The Borrowers may request that the Bank, in lieu of cash advances, issue standby
letters of credit (individually, a "Letter of Credit" and collectively, the
"Letters of Credit") under the Line of Credit in an amount not to exceed
$500,000 in the aggregate having expiration dates not to exceed one year (but in
no event shall the expiration date of a Letter of Credit be later than the date
one week prior to the Expiration Date). The availability of Advances under the
Line of Credit shall be reduced by the face amount of each Letter of Credit
issued and outstanding (whether or not drawn). Each payment by the Bank under a
Letter of Credit shall, in the Bank's discretion, constitute an Advance of
principal under the Line of Credit and shall be evidenced by the Note (as
defined below). The Letters of Credit shall be governed by the terms of this
Letter Agreement and by one or more reimbursement agreements, in form and
content satisfactory to the Bank, executed by the Borrowers in favor of the Bank
(collectively, the "Reimbursement Agreements"). Each request for the issuance of
a Letter of Credit must be accompanied by the requesting Borrower's execution of
an application on the Bank's standard forms (each, an "Application"), together
with all supporting documentation. Each Letter of Credit will be issued in the
Bank's sole discretion and in a form acceptable to the Bank. The Borrowers shall
pay to Bank a Letter of Credit fee in an amount equal to 2.25% per annum of the
face amount of each Letter of Credit, which fee shall be payable quarterly in
arrears on the first day of each calendar quarter, together with such other
customary fees, commissions and expenses therefor as shall be required by the
Bank. This letter is not a pre-advice for the issuance of a Letter of Credit and
is not irrevocable.

The availability of Advances and Letters of Credit under the Line of Credit will
be subject to a borrowing base formula and other provisions as set forth in a
Borrowing Base Rider dated on or about the date of this Letter Agreement among
the Borrowers and the Bank, the terms of which are incorporated herein by
reference (the "Borrowing Base Rider"). At no time shall the sum of outstanding
Advances under the Line of Credit plus the face amount of any outstanding
Letters of Credit (whether or not drawn) exceed the Borrowing Base (as defined
in the Borrowing Base Rider). Pursuant to the Borrowing Base Rider, the
Borrowers will be required to deliver periodic Borrowing Base Certificates,
reporting on their accounts and inventory in accordance with defined eligibility
standards, as a condition to Advances under the Line of Credit.

Note. The obligation of the Borrower to repay advances under the Line of Credit
shall be evidenced by an amended and restated promissory note (the "Note") in
form and content satisfactory to the Bank.

This Letter Agreement, the Note, the Security Agreement (as defined below) and
the other agreements and documents executed and/or delivered pursuant hereto, as
each may be amended, modified, extended or renewed from time to time, will
constitute the "Loan Documents." Capitalized terms not defined herein shall have
the meaning ascribed to them in the Loan Documents.

Interest Rate

. Interest on the unpaid balance of the Line of Credit Advances will be charged
at the rates, and be payable on the dates and times, set forth in the Note.

Repayment

. Subject to the terms and conditions of this Letter Agreement, the Borrowers
may borrow, repay and reborrow under the Line of Credit until the Expiration
Date, on which date the outstanding principal balance and any accrued but unpaid
interest shall be due and payable. Interest will be due and payable as set forth
in the Note, and will be computed on the basis of a year of 360 days and paid on
the actual number of days that principal is outstanding.

Security

. The Borrowers must cause, or have previously caused the following to be
executed and delivered to the Bank, in form and content satisfactory to the
Bank, as security for the Line of Credit:

a security agreement (the "Security Agreement") granting the Bank a first
priority perfected lien on each Borrower's existing and future assets and
property, wherever located, as more fully described therein, excluding only the
patents and trademarks of Borrowers.

If all or any portion of the tangible collateral is located on property which is
not owned by the Borrowers or which is subject to a mortgage in favor of another
lender, the Borrowers will deliver to the Bank Landlord's or Mortgagee's
Waivers, as applicable, acceptable in form and content to the Bank for each such
location.

Hazard insurance must be maintained on all inventory and equipment securing the
Line of Credit in such amounts and with such coverages as are acceptable to the
Bank, containing a standard lender loss payable clause in favor of the Bank.

The Loan will be cross-collateralized and cross-defaulted with all other present
and future Obligations (as defined in the Loan Documents) of the Borrowers to
the Bank.

Covenants

. Unless compliance is waived in writing by the Bank, until payment and
satisfaction in full of the Loan and termination of the commitment for the Line
of Credit:

The Borrowers will promptly submit to the Bank such information as the Bank may
reasonably request relating to the Borrowers' affairs (including but not limited
to annual Financial Statements (as hereinafter defined) and tax returns for the
Borrowers) or any security for the Loan.

No Borrowers will make or permit any change in its form of organization or the
nature of its business as carried on as of the date of this Letter Agreement.

InTest will not make or permits any change in its executive officers as set
forth on Schedule 6(c) attached hereto.

No Borrower will make or permit any change in its equity ownership, which
results in greater than twenty-five percent (25%) equity ownership by any one
person.

The Borrowers will notify the Bank in writing of the occurrence of any Event of
Default or an act or condition which, with the passage of time, the giving of
notice or both, might become an Event of Default.

The Borrowers will comply with the financial and other covenants included in
Exhibit "A" hereto.

Representations and Warranties

. To induce the Bank to extend the Loan and upon the making of each Advance to
the Borrowers or issuing any Letter of Credit

under the Line of Credit, each Borrower represents and warrants as follows:

The Borrowers' latest Financial Statements provided to the Bank are true,
complete and accurate in all material respects and fairly present the financial
condition, assets and liabilities, whether accrued, absolute, contingent or
otherwise, and the results of the Borrowers' operations for the period specified
therein. The Borrowers' Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied from period
to period subject, in the case of interim statements, to normal year-end
adjustments. Since the date of the latest Financial Statements provided to the
Bank, the Borrowers have not suffered any damage, destruction or loss which has
materially adversely affected their business, assets, operations, financial
condition or results of operations.

There are no actions, suits, proceedings or governmental investigations pending
or, to the knowledge of the Borrowers, threatened against any Borrower which
could result in a material adverse change in such Borrower's business, assets,
operations, financial condition or results of operations, and there is no basis
known to any Borrower or its officers, directors or shareholders for any such
action, suit, proceedings or investigation.

Each Borrower has filed all returns and reports that are required to be filed
(subject to any extensions granted) by it in connection with any federal, state
or local tax, duty or charge levied, assessed or imposed upon such Borrower or
its property, including unemployment, social security and similar taxes, and all
of such taxes have been either paid, except such taxes (other than real estate
taxes which must be paid regardless of challenge), if any, as are being
contested in good faith and as to which adequate reserves have been provided.

Each Borrower is duly organized, validly existing and in good standing under the
laws of the state of its incorporation or organization and has the power and
authority to own and operate its assets and to conduct its business as now or
proposed to be carried on, and is duly qualified, licensed and in good standing
to do business in all jurisdictions where its ownership of property or the
nature of its business requires such qualification or licensing.

Each Borrower has full power and authority to enter into the transactions
provided for in this Letter Agreement and has been duly authorized to do so by
all necessary and appropriate action and, when executed and delivered by such
Borrower, this Letter Agreement and the other Loan Documents will constitute the
legal, valid and binding obligations of such Borrower, enforceable against such
Borrower in accordance with their terms.

There does not exist any default or violation by any Borrower of or under any of
the terms, conditions or obligations of: (i) its organizational documents; (ii)
any indenture, mortgage, deed of trust, franchise, permit, contract, agreement,
or other instrument to which it is a party or by which it is bound; or (iii) any
law, regulation, ruling, order, injunction, decree, condition or other
requirement applicable to or imposed upon the Borrower by any law or by any
governmental authority, court or agency.

Fees

.

On the date of the Note, the Borrowers shall pay to the Bank a fee of $17,500.

On the last day of each calendar quarter, until the Expiration Date, the
Borrowers shall pay a commitment fee to the Bank, in arrears, at the rate of
0.425% per annum on the average daily balance of the Line of Credit which is
undisbursed and uncancelled during the preceding calendar quarter. The
commitment fee shall be computed on the basis of a year of 360 days and paid on
the actual number of days elapsed.

Expenses

. The Borrowers will reimburse the Bank for the Bank's out-of-pocket expenses
incurred or to be incurred at any time in conducting UCC, title and other public
record searches, and in filing and recording documents in the public records to
perfect the Bank's liens and security interests. The Borrowers shall also
reimburse the Bank for the Bank's expenses (including the reasonable fees and
expenses of the Bank's outside and in-house counsel) in documenting and closing
this transaction, in connection with any amendments, modifications or renewals
of the Loan, and in connection with the collection of all of the Borrowers'
Obligations to the Bank, including but not limited to enforcement actions
relating to the Loan.

Depository

. The Borrowers will establish and maintain at the Bank the Borrowers' primary
depository accounts, with balances in the aggregate of at least $50,000.

Additional Provisions

. Before the first advance under the Loan and/or the issuance of any Letter of
Credit, the Borrowers shall execute and deliver to the Bank the Note, an
Application for each Letter of Credit, the Reimbursement Agreements, the
Security Agreement and the other required Loan Documents and such other
instruments and documents as the Bank may reasonably request, such as certified
resolutions, incumbency certificates or other evidence of authority. The Bank
will not be obligated to make any Advance or to issue any Letter of Credit under
the Line of Credit if any Event of Default or event which with the passage of
time, provision of notice or both would constitute an Event of Default, shall
have occurred and be continuing.

Prior to execution of the final Loan Documents, the Bank may terminate this
Letter Agreement if a material adverse change occurs with respect to any
Borrower, any collateral for the Loan or any other person or entity connected in
any way with the Loan, or if the Borrowers fail to comply with any of the terms
and conditions of this Letter Agreement, or if the Bank reasonably determines
that any of the conditions cannot be met.

This Letter Agreement is governed by the laws of New Jersey. No modification,
amendment or waiver of any of the terms of this Letter Agreement, nor any
consent to any departure by the Borrowers therefrom, will be effective unless
made in a writing signed by the party to be charged, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. When accepted, this Letter Agreement and the other Loan Documents
will constitute the entire agreement between the Bank and the Borrowers
concerning the Line of Credit, and shall replace all prior understandings,
statements, negotiations and written materials relating to the Line of Credit,
including, without limitation, the Existing Letter Agreement.

The Borrowers agree to indemnify the Bank (and its directors, officers,
employees, agents and controlling persons) against any and all claims, losses,
damages, liabilities, costs and expenses (including, by way of example only,
fees and expenses of counsel and expert witnesses) which may be incurred by any
of them in connection with any investigation, litigation or other proceeding
relating to the Loan, the Loan Documents and/ or the use of proceeds of the
Loan, except those solely attributable to its or their own gross negligence or
willful misconduct. The Borrowers' indemnification obligations are in addition
to any other liability the Borrowers may otherwise have, and shall survive
payment in full of the Loans, termination of this Letter Agreement and the other
Loan Documents, and assignment of any rights hereunder.

The Bank will not be responsible for any damages, consequential, incidental,
special, punitive or otherwise, that may be incurred or alleged by any person or
entity, including the Borrowers, as a result of this Letter Agreement, the other
Loan Documents, the transactions contemplated hereby or thereby, or the use of
proceeds of the Loan.

THE BORROWERS AND THE BANK IRREVOCABLY WAIVE ANY AND ALL RIGHTS THEY MAY HAVE TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE ARISING OUT OF
THIS LETTER AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED IN ANY OF SUCH DOCUMENTS AND ACKNOWLEDGE THAT THE FOREGOING WAIVER
IS KNOWING AND VOLUNTARY.

The Borrowers shall be jointly and severally liable for all Obligations arising
under this Letter Agreement and the other Loan Documents.

If and when a loan closing occurs, this Letter Agreement (as the same may be
amended from time to time) shall survive the closing and will serve as our loan
agreement throughout the term of the Loan.

Thank you for giving PNC Bank this opportunity to work with your business. We
look forward to other ways in which we may be of service to your business or to
you personally.

Very truly yours,

PNC BANK, NATIONAL ASSOCIATION

By: /s/ Gary Martz
Print Name: Gary Martz
Title: Assistant Vice President

ACCEPTANCE

With the intent to be legally bound hereby, the above terms and conditions are
hereby agreed to and accepted as of this 29th day of May, 2002.

TEMPTRONIC CORPORATION

By: /s/ Hugh T. Regan, Jr.
Print Name: Hugh T. Regan, Jr.
Title: Secretary and Treasurer

INTEST CORPORATION

By: /s/ Hugh T. Regan, Jr.
Print Name: Hugh T. Regan, Jr.
Title: Secretary and Treasurer

INTEST INVESTMENTS, INC.

By: /s/ Hugh T. Regan, Jr.
Print Name: Hugh T. Regan, Jr.
Title: Secretary and Treasurer

INTEST SUNNYVALE CORPORATION

By: /s/ Hugh T. Regan, Jr.
Print Name: Hugh T. Regan, Jr.
Title: Secretary and Treasurer

INTEST IP CORP.

By: /s/ Hugh T. Regan, Jr.
Print Name: Hugh T. Regan, Jr.
Title: Secretary and Treasurer

INTEST LICENSING CORP.

By: /s/ Hugh T. Regan, Jr.
Print Name: Hugh T. Regan, Jr.
Title: Secretary and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A
TO LETTER AGREEMENT
DATED MAY 29, 2002

FINANCIAL REPORTING COVENANTS

:

The Borrowers will deliver to the Bank:

Financial Statements for its fiscal year, within ninety (90) days after fiscal
year end, audited and certified without qualification by a certified public
accountant acceptable to the Bank.

Financial Statements for each fiscal quarter, within forty-five (45) days after
the fiscal quarter end, together with year-to-date and comparative figures for
the corresponding periods of the prior year, certified as true and correct by
InTEST's chief financial officer.

With each delivery of Financial Statements, a certificate of InTEST's chief
financial officer as to the Borrowers' compliance with the financial covenants
set forth below, if any, for the period then ended and whether any Event of
Default exists, and, if so, the nature thereof and the corrective measures the
Borrowers propose to take. This certificate shall set forth all detailed
calculations necessary to demonstrate such compliance.

The Borrowers will deliver to the Bank within twenty-five (25) days following
the close of each month, the Borrowers' detailed schedule of accounts receivable
and accounts payable aging analysis and a report of the Borrowers' inventory, as
established by a physical count or such other method as may be approved by the
Bank.

Promptly upon request by Bank, the Borrowers shall deliver to the Bank such
operating budgets and forecasts of Borrowers' cash flows, expenses and Borrowing
Base availability as Bank may reasonably require, all of which shall be in form
and content satisfactory to Bank.

Upon request by Bank and in any event at least contemporaneously with the
delivery of Financial Statements, a copy of Borrowers' brokerage account
statement evidencing Borrowers' compliance with the Liquidity Covenant set forth
below.

"Financial Statements"

means Borrowers' consolidated and consolidating balance sheet and statements of
income and cash flows prepared in accordance with generally accepted accounting
principles in effect from time to time (
"GAAP"
) applied on a consistent basis (subject in the case of interim statements to
normal year-end adjustments).

In the event that any financial information submitted to the Bank has been
prepared by an outside accountant, the same shall be accompanied by a statement
in writing signed by the accountant disclosing that the accountant is aware that
the information prepared by such accountant would be submitted to and relied
upon by the Bank in connection with the Bank's determination to grant or
continue credit.

FINANCIAL COVENANTS

:

The Borrowers shall maintain at all times a minimum Consolidated Tangible Net
Worth of $22,000,000.00.

The Borrowers shall have at all times unencumbered cash and cash equivalents
satisfactory to Bank with a value of at least $2,000,000, maintained with
financial institutions or brokerage firms in one or more accounts located in the
United States of America (the "Liquidity Covenant").

Borrowers shall have Consolidated EBITDA of (a) not worse than negative
$2,000,000.00 for the fiscal quarter ending June 30, 2002; (b) not less than
$125,000.00 for the fiscal quarter ending September 30, 2002; (c) not less than
$370,000.00 for the fiscal quarter ending December 31, 2002; and (d) not less
than $500,000.00 for the fiscal quarter ending March 31, 2003 and for each
fiscal quarter of Borrower ending thereafter.

The Borrowers shall not make or incur capital expenditures in excess of $400,000
in the aggregate during any fiscal year.

As used herein:

"Consolidated EBITDA"

means, for any period, Borrowers' consolidated net income,
plus
interest expense,
plus
income tax expense,
plus
depreciation,
plus
amortization.

"Consolidated Tangible Net Worth"

means, as of any date, Borrowers' consolidated stockholder's equity,
less
any advances to affiliated parties,
less
all items properly classified as intangibles, in accordance with GAAP.

All of the above financial covenants shall be computed and determined in
accordance with GAAP applied on a consistent basis (subject to normal year-end
adjustments).

NEGATIVE COVENANTS

:

The Borrowers will not create, assume, incur or suffer to exist any mortgage,
pledge, encumbrance, security interest, lien or charge of any kind upon any of
its property, now owned or hereafter acquired, or acquire or agree to acquire
any kind of property under conditional sales or other title retention
agreements; provided, however, that the foregoing restrictions shall not prevent
the Borrowers from:

incurring liens for taxes, assessments or governmental charges or levies which
shall not at the time be due and payable or can thereafter be paid without
penalty or are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which it has created adequate reserves;

making pledges or deposits to secure obligations under workers' compensation
laws or similar legislation;

granting additional liens or security interests to secure existing or future
indebtedness in an aggregate principal amount not to exceed $100,000 at any
time, provided such liens and security interests shall encumber only those
assets of Borrowers acquired with the proceeds of such indebtedness;

entering into leases, as lessee, for real or personal property, provided that
the aggregate annual rental obligations of Borrowers under all such leases shall
not exceed $50,000; or

granting liens or security interests in favor of the Bank.

The Borrowers will not create, incur, guarantee, endorse (except endorsements in
the course of collection), assume or suffer to exist any indebtedness, except:

indebtedness to the Bank;

open account trade debt incurred in the ordinary course of business and not past
due, or

indebtedness in respect of which liens are permitted under subparagraphs (1)(c)
and 1(d) above, and any refinancings thereof; provided that the amount of the
refinancing indebtedness is not more than the outstanding amount of the
refinanced indebtedness, and the terms of the refinancing indebtedness are no
more favorable to the lender than the terms of the refinanced indebtedness.

The Borrowers will not liquidate, or dissolve, or merge or consolidate with any
person, firm, corporation or other entity, or sell, lease, transfer or otherwise
dispose of all or any substantial part of its property or assets, whether now
owned or hereafter acquired, which at the time of such disposition has a fair
market value in excess of $100,000.

The Borrowers will not make acquisitions of all or substantially all of the
property or assets of any person, firm, corporation or other entity.

The Borrowers will not declare or pay any dividends on or make any distribution
with respect to any class of its equity, or purchase, redeem, retire or
otherwise acquire any of its equity.

The Borrowers will not make or have outstanding any loans or advances to or
otherwise extend credit to any person, firm, corporation or other entity, except
in the ordinary course of business, or make any investments, except for cash
equivalents.

Borrowers shall not enter into any agreement with any other party which shall
prohibit the Borrowers from granting, creating or suffering to exist, or
otherwise restrict in any way (whether by covenant, by identifying such event as
a default under such agreement or otherwise) the ability of the Borrowers to
grant, create or suffer to exist in favor of Bank, any lien, security interest
or other charge or encumbrance upon or with respect to any of Borrowers' assets.

The Borrowers shall notify the Bank in writing not less than five (5) business
days prior to entering into any credit agreement or any amendment or
modification to any existing credit agreement, in either case as permitted under
the Loan Documents, pursuant to which any Borrower agrees to representations,
warranties, covenants or terms which are more restrictive to such Borrower than
those contained in any of the Loan Documents (the "More Restrictive
Provisions"). Upon execution of such new agreement, amendment or modification,
the corresponding covenants, terms and conditions of the Loan Documents shall be
and are automatically and immediately deemed to be amended to conform with and
to include the More Restrictive Provisions with respect to all Borrowers;
provided, however, that the foregoing shall not be applicable to or be deemed to
affect any provision of the Loan Documents if any new credit agreement,
amendment or modification is less restrictive to any Borrower. The Borrowers
hereby agree promptly to execute and deliver any and all such documents and
instruments and to take all such further actions as the Bank, in its sole
discretion, may deem necessary or appropriate to effectuate the provisions of
this paragraph.

SCHEDULE 6(C)
TO LETTER AGREEMENT
DATED MAY 29, 2002

Executive Officers of inTest Corporation

Alyn R. Holt - Chairman

Robert E. Matthiessen - President and CEO

Hugh T. Regan, Jr. - Secretary, Treasurer and CFO

Steve G. Radakovich - Vice President Operations and COO

Daniel J. Graham - Executive Vice President and Vice Chairman

Jerome R. Bortnem - Vice President - Sales & Marketing

Jack R. Edmunds - Vice President - Supply Chain Management