Document:

Exhibit 10.1

 

AMENDMENT NUMBER SIX TO REVOLVING CREDIT AGREEMENT

This AMENDMENT NUMBER SIX TO REVOLVING CREDIT AGREEMENT (this “Amendment”), dated as of March 29, 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”), 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, and that certain Amendment Number Five to Revolving Credit Agreement, dated as of July 1, 2005 (as so amended, the “Agreement”); and

B.           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:

“COF Lending Rate” means the sum of the COF (as of the date the 

 

	
             
 	
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Equipment Loans have been converted to COF Lending Rate Loans pursuant to Borrowers’ exercise of their option under Section 2.4(a)(iii)) plus two and one quarter percentage points (225 basis points).

“Commitment” means a Lender’s Revolving Credit Commitment, Term Loan Commitment, Equipment Loan Commitment, and/or Term Loan B Commitment, as the context requires.

“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 Revolving Loans Maturity Date (in the case of the Revolving Loans), the Term Loans Maturity Date (in the case of the Term Loans), and the Term Loans B Maturity Date (in the case of the Term Loans B);

(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.”

“LIBOR Lending Rate Margin” means two and one-quarter percentage points (225 basis points).

“Loans” means the Revolving Loans, the Term Loans, the Equipment Loans, and the Term Loans B (each, a “Loan”).

“Notes” means, collectively, the Revolving Notes, the Term Notes, the Equipment Loans Notes, and the Term B Notes (each, a “Note”).

“Prime Lending Rate” means the variable per annum rate equal to the Prime Rate minus one quarter of one percentage point (25 basis points).

“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 and Term Loan B Commitment, divided by the Total Credit.”

“Total Credit” means $24,900,000.

(b)          The definition of “Interest Period” in Section 1.1 of the Agreement is hereby amended to amend clause (iii) to read as follows:

 

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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 may extend beyond the Term Loans Maturity Date, and no Interest Period respecting the Term Loans B may extend beyond the Term Loans B Maturity Date.

(c)          The following definitions are hereby added to Section 1.1 of the Agreement in alphabetical order:

“Hoffman” means Marvin Hoffman, an individual.

“Hoffman Employment Agreement” means that certain letter agreement between Parent and Hoffman, dated September 24, 2001, regarding the terms of Hoffman’s employment with Parent, pursuant to which, among other things, Hoffman granted Parent an option to repurchase the Hoffman Stock.

“Hoffman Stock” means 792,266 shares of Capital Stock of Parent owned by Hoffman.

“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”).

“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.

“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).

“Term Loans B Maturity Date” means March 29, 2010.

“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.

2.2          Term Loans B. Section 2.2 of the Agreement is hereby amended by adding clauses (c) and (d) as follows:

(c)          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 March 31, 2006, 

 

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or as soon as practicable thereafter, in an amount equal to each such Term Loan B Lender’s Term Loan B Commitment, the proceeds of which shall only be used only to acquire the Hoffman Stock pursuant to the stock option granted to Parent under the Hoffman Employment Agreement, or to reimburse Parent for such acquisition price, if Parent has previously acquired the Hoffman Stock. 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 March 31, 2006, 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 to Hoffman or Parent, as applicable, as directed pursuant to written disbursement instructions provided by Borrowers.

(b)          Amortization. Borrowers shall pay forty-eight monthly principal reduction payments on the Term Loans, each in the aggregate amount of $81,250. Each such payment shall be due and payable on the last day of each month commencing April 30, 2006 and continuing on the last day of each succeeding month. 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. 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 2.2 for each such Term Loan B Lender’s respective account. All prepayments shall be applied toward scheduled principal reductions payments owing under this Section 2.2 in inverse order of maturity.

	
             
 	
            2.3
 	
            Interest Rates. Section 2.4(a)(ii) of the Agreement is hereby amended as follows:
 

(ii)          Term Loans. Subject to the terms and conditions hereof, the Term Loans and 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 and/or Term Loans B; provided, however, there shall be no more than two (2) LIBOR Lending Rate Portions each of Term Loans and Term Loans B outstanding at any time. LIBOR Lending Rate Portions shall be in minimum amounts each of One Million Dollars ($1,000,000).

	
             
 	
            2.4
 	
            Notes. Sections 2.11(a) and (b) of the Agreement are hereby amended 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 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, and/or Term Loans 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 Commitment, Equipment Loan Commitment, and/or Term Loans 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.

(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 Loan 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 Loan 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 subaccount 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 subaccount with respect to any Loan or continuation, conversion or payment thereof shall not limit or otherwise affect Borrowers’ obligations hereunder or under the Notes.

2.5          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 

 

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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%, or the Term Loan B Lenders the Term Loans B 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:

2.6          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

(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 

 

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Commitment Percentages of which aggregate more than 66.67%; or

2.7          Amendment to Schedule 1.1C. Schedule 1.1C of the Agreement is hereby amended and restated in its entirety and replaced with the Schedule 1.1C attached hereto.

2.8          Amendment to Exhibit 2.11(a). Exhibit 2.11(a) to the Agreement is hereby appended with the form of Term Loans B Note set forth on the Exhibit 2.11(a) 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 Loans B Notes payable to each Lender in the amount of such Lender’s respective Term Loan B Commitment, duly executed by Borrowers;

(c)          Agent shall have received a true and correct copy of (i) the Hoffman Employment Agreement in form and substance satisfactory to Agent and Lenders, and (ii) the letter from Parent to Hoffman notifying Hoffman that Parent is exercising its option to repurchase the Hoffman Shares and the price therefor;

(d)          Agent and Lenders shall have satisfactory evidence that upon the funding of each Lender’s Term Loan B, either Hoffman shall have previously released the Hoffman Shares to Parent, or shall immediately release the Hoffman Shares to Parent, whereupon such shares shall be cancelled;

(e)          Agent shall have received, for the pro rata account of Lenders, a Term Loan B fee of $9,750, 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;
 

 

 

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(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]

 

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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/ LLOYD BLONDER                                                     
    

	
             
 	
            Lloyd Blonder, Senior Vice President,
 	
             

	
             
 	
            Chief Financial Officer, Treasurer and
 
	
             
 	
            Assistant Secretary
 	
             

				

NTS TECHNICAL SYSTEMS dba NATIONAL TECHNICAL SYSTEMS

  By:
    /s/ LLOYD BLONDER                                                     
    

	
             
 	
            Lloyd Blonder, Senior Vice President,
 	
             

	
             
 	
            Chief Financial Officer, Treasurer and
 
	
             
 	
            Assistant Secretary
 	
             

				

XXCAL, INC.

  By:
    /s/ LLOYD BLONDER                                                     
    

	
             
 	
            Lloyd Blonder, Vice President, Treasurer
 
	
             
 	
            and Assistant Secretary
 	
             

APPROVED ENGINEERING TEST LABORATORIES, INC.

  By:
    /s/ LLOYD BLONDER                                                     
    

	
             
 	
            Lloyd Blonder, Vice President, Treasurer
 
	
             
 	
            and Assistant Secretary
 	
             

ETCR, INC.

  By:
    /s/ LLOYD BLONDER                                                     
    

	
             
 	
            Lloyd Blonder, Vice President, Treasurer
 
	
             
 	
            and Assistant Secretary
 	
             

 

 

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ACTON ENVIRONMENTAL TESTING CORPORATION

  By:
      /s/ LLOYD BLONDER                                                     
    

	
             
 	
            Lloyd Blonder, Vice President, Treasurer
 
	
             
 	
            and Assistant Secretary
 	
             

PHASE SEVEN LABORATORIES, INC.

  By:
    /s/ LLOYD BLONDER                                                     
    

	
             
 	
            Lloyd Blonder, Vice President, Treasurer
 
	
             
 	
            and Assistant Secretary
 	
             

COMERICA BANK, in its capacities as Agent, Issuing Lender and a Lender

  By:
    /s/ VAHE S. MEDZOYAN                                         
      

	
             
 	
            Vahe S. Medzoyan, Vice President
 

FIRST BANK & TRUST, in its capacity as a Lender

  By:
    /s/ LISA STAVRO                                                         

Name: Lisa Stavro

Title: Senior Vice President

 

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Schedule 1.1C

Schedule of Commitments

 

	
            Revolving Loan Lender
 	
            Revolving Credit Commitment
 	
            Revolving Credit Commitment Percentage
 
	
            Comerica

First Bank & Trust
 	
            $9,900,000

$6,600,000
 	
            60%

40%

 
 
	
            Term Loan Lender
 	
            Term Loan Commitment
 	
            Term Loan Commitment Percentage
 
	
            Comerica

First Bank & Trust
 	
            $1,500,000

$1,000,000
 	
            60%

40%

 
 
	
            Equipment Loan Lender
 	
            Equipment Loan Commitment
 	
            Equipment Loan Commitment Percentage

 
	
            Comerica

First Bank & Trust
 	
            $1,200,000

$800,000
 	
            60%

40%
 
	
            Term Loan B Lender
 	
            Term Loan B Commitment
 	
            Term Loan B Commitment Percentage
 
	
            Comerica

First Bank & Trust
 	
            $2,340,000

$1,560,000
 	
            60%

40%

 
 

 

 

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Exhibit 2.11(a)

Form of Term Loan B Note

 

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SECURED TERM LOAN B PROMISSORY NOTE

	
             
 	
            $___________
 	
            Los Angeles, California
 
	
             
 	
            March 31, 2006
 
				

This Secured Term Loan B Promissory Note (this “Note”) is being delivered pursuant 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 the date hereof by and among Makers (as defined below), the financial institutions from time to time parties thereto as the
Lenders, and Comerica Bank, as contractual representative for itself and the Lenders (as the same may be at any time heretofore or hereafter amended, supplemented, or otherwise modified or restated, the “Agreement”). Initially capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Agreement.

1.            FOR VALUE RECEIVED, NATIONAL TECHNICAL SYSTEMS, INC., a California corporation, NTS TECHNICAL SYSTEMS, a California corporation, dba National Technical Systems, XXCAL, INC., a California corporation, APPROVED ENGINEERING TEST LABORATORIES, INC., a California corporation, ETCR, INC., a California corporation, PHASE SEVEN LABORATORIES, INC., a California corporation, and ACTON ENVIRONMENTAL TESTING CORPORATION, a Massachusetts corporation, (collectively, “Makers”), jointly and severally promise to pay to the order of _______________ (“Payee”), on or before the Term Loans B Maturity Date, the principal sum of ________________ Dollars ($___________), or such lesser
sum as shall equal the aggregate outstanding principal amount of the Term Loan B made by Payee to Makers jointly and severally pursuant to the Agreement (as defined below). 

2.            Makers promise to make principal reduction payments on the outstanding principal balance hereof in the amounts and on the dates specified in the Agreement. Makers further promise to pay interest from the date of this Secured Term Loan B Promissory Note (this “Note”) in like money on the aggregate outstanding principal amount hereof at the rates and on the dates provided in the Agreement. All computations of interest shall be in accordance with the provisions of the Agreement.

3.            Makers hereby authorize Payee to record in its books and records the date, type and amount of the Term Loan B, and of each continuation, conversion and payment of principal made by Makers, and Makers agree that all such notations shall, in the absence of manifest error, be conclusive as to the matters so noted; provided, however, any failure by Payee to make such notation with respect to the Term Loan B or continuation, conversion, or payment thereof shall not limit or otherwise affect Makers’ obligations under the Agreement or this Note.

 

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4.            Upon the occurrence and during the continuance of an Event of Default, in addition to and not in substitution of any of Agent or Lenders’ other rights and remedies with respect to such Event of Default, the entire unpaid principal balance owing hereunder shall bear interest at the applicable Lending Rate plus three hundred (300) basis points. In addition, interest, Expenses and Fees, and other amounts due hereunder or under the Agreement not paid when due shall bear interest at the Prime Lending Rate plus three hundred (300) basis points until such overdue payment is paid in full.

5.            If any payment due hereunder, whether for principal, interest, or otherwise, is not paid on or before the tenth day after the date such payment is due, in addition to and not in substitution of any of Payee’s other rights and remedies with respect to such nonpayment, Makers shall pay to Payee, a late payment fee (“Late Payment Fee”) equal to five percent (5%) of the amount of such overdue payment. The Late Payment Fee shall be due and payable on the eleventh day after the due date of the overdue payment with respect thereto.

6.            Makers shall make all payments hereunder in lawful money of the United States of America and in immediately available funds to Comerica Bank, a Michigan banking corporation (“Agent”), for the account of Payee, at Agent’s office located at 15303 Ventura Boulevard, Suite 100, Sherman Oaks, CA 91403, Attention: Vahe S. Medzoyan; or to such other address as Agent may from time to time specify by notice to Makers in accordance with the terms of the Agreement.

7.            In no event shall the interest rate and other charges hereunder exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that Payee has received interest and other charges hereunder in excess of the highest rate applicable hereto, such excess shall be deemed received on account of, and shall automatically be applied to reduce, the principal balance hereof, and the provisions hereof shall be deemed amended to provide for the highest permissible rate. If there is no principal balance outstanding, Payee shall refund to Makers such excess.

8.            This Note is one of the “Term Loan B Notes” issued pursuant to the Agreement and is governed by the terms thereof.  The Agreement, among other things, contains provisions for acceleration of the maturity of this Note upon the happening of certain stated events and also for prepayments on account of principal of this Note prior to the maturity hereof upon the terms and conditions specified in the Agreement. This Note and the Term Loan B evidenced hereby may be assigned or otherwise transferred in whole or in part only by registration of such assignment or transfer on the Register maintained by Agent pursuant to the terms of the Agreement.

9.            This Note is secured by the Liens granted to Agent, for the ratable benefit of Lenders, under the Loan Documents.

10.          Makers hereby waive presentment for payment, notice of dishonor, protest and notice of protest.

 

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11.                THE VALIDITY OF THIS NOTE AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD FOR PRINCIPLES OF CONFLICTS OF LAWS.

(a)                 THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT PAYEE’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE PAYEE ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. MAKERS AND PAYEE WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 11.

(b)                 MAKERS AND PAYEE HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE OR ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. MAKERS AND PAYEE REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS SECURED TERM LOAN PROMISSORY NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

12.          This Secured Term Loans Promissory Note hereby incorporates the Reference Provision set forth in Section 11.10 of the Loan Agreement.

 

15

 

 

 

IN WITNESS WHEREOF, Makers have duly executed this Note as of the date first above written.

NATIONAL TECHNICAL SYSTEMS, INC.

By:                                          
                                      

	
             
 	
            Lloyd Blonder, Senior Vice President,
 	
             

	
             
 	
            Chief Financial Officer, Treasurer and
 
	
             
 	
            Assistant Secretary
 	
             

				

NTS TECHNICAL SYSTEMS dba NATIONAL TECHNICAL SYSTEMS

By:                                           
                                    

	
             
 	
            Lloyd Blonder, Senior Vice President,
 	
             

	
             
 	
            Chief Financial Officer, Treasurer and
 
	
             
 	
            Assistant Secretary
 	
             

				

XXCAL, INC.

By:                                           
                                    

	
             
 	
            Lloyd Blonder, Vice President, Treasurer
 
	
             
 	
            and Assistant Secretary
 	
             

APPROVED ENGINEERING TEST LABORATORIES, INC.

By:                                           
                                    

	
             
 	
            Lloyd Blonder, Vice President, Treasurer
 
	
             
 	
            and Assistant Secretary
 	
             

ETCR, INC.

By:                                           
                                    

	
             
 	
            Lloyd Blonder, Vice President, Treasurer
 
	
             
 	
            and Assistant Secretary
 	
             

 

 

16

 

 

 

ACTON ENVIRONMENTAL TESTING CORPORATION

  By:                                       

	
             
 	
            Lloyd Blonder, Vice President, Treasurer
 
	
             
 	
            and Assistant Secretary
 	
             

PHASE SEVEN LABORATORIES, INC.

By:                                           
                                    

	
             
 	
            Lloyd Blonder, Vice President, Treasurer
 
	
             
 	
            and Assistant Secretary
 	
             

 

 

17Exhibit 10.1

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

AMENDMENT (this “Amendment”), dated as of
February 28, 2006, to the Amended and Restated Credit Agreement (the “Credit Agreement”), dated as of June 30, 2005, among DUKE ENERGY
CORPORATION, the BANKS listed on the signature pages hereof, CITIBANK, N.A., as Administrative Agent, and BANK OF AMERICA, N.A., as Syndication Agent.

W I T N E S S E T H :

WHEREAS, the Borrower has advised the Banks that it wishes to undertake the consummation of the
business combination with Cinergy Corp., a Delaware corporation (“Cinergy”), pursuant to which each of the Borrower and Cinergy will merge
with a separate subsidiary of the Company (as defined below) and will thereby become a wholly-owned subsidiary of the Company (such merger involving the Borrower, the “Borrower Merger”);

 

WHEREAS, following consummation of the Borrower Merger (i) the Borrower intends to convert from Duke
Energy Corporation, a North Carolina corporation, to Duke Power Company LLC, a North Carolina limited liability company in accordance with the provisions of Part 2 of Article 11A of the North
Carolina Business Corporation Act and Part 1 of Article 9A of the North Carolina Limited Liability Company Act (the “Conversion”) and (ii) the
Borrower intends to distribute its membership interest in Duke Capital LLC, a Delaware limited liability company, to the Company (the “Distribution
”);

 

WHEREAS, the parties hereto desire to amend and/or waive certain provisions of the Credit Agreement as
provided herein;

 

NOW, THEREFORE, the parties hereto agree as follows:

Section 1.  Defined Terms; References.  Unless otherwise
specifically defined herein, each capitalized term used herein which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement.  Each reference to
“hereof”, “hereunder”, “herein” and “hereby” and each other similar reference and each other similar reference contained in the Credit Agreement shall, after
the amendments herein become effective, refer to the Credit Agreement as amended hereby.

Section 2.  Amendments to Definitions. 

(a)    Effective simultaneously with consummation of the
Conversion, the definition of the following term set forth in Section 1.01 of the Credit Agreement is hereby amended to read in full as follows:

 

 

“Borrower” means Duke Power Company LLC, a
North Carolina limited liability company, and its successors.

(b)     Section 1.01 of the Credit Agreement is amended
by adding the following definition in the appropriate alphabetical place:

“Company” means Duke Energy Corporation, a
Delaware corporation, originally incorporated as Deer Holding Corporation, a Delaware corporation.

Section 3.  Amendments to Defaults. Section 6.01(k) of
the Credit Agreement is hereby amended to read as follows:

(k) any person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)) other than trustees and participants in employee benefit plans of the Company and its
Subsidiaries or the Endowment or Trust, shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under the Exchange Act) of 50%
or more of the outstanding shares of common stock of the Company; during any period of twelve consecutive calendar months, individuals who were directors of the Company on the first day of such
period (together with any successors nominated or appointed by such directors in the ordinary course) shall cease to constitute a majority of the board of directors of the Company; or the Borrower
shall cease to be a

Subsidiary of the Company;

Section 4.  Consent to LLC Conversion. The
Administrative Agent hereby consents to the Conversion.

Section 5.  Limited Waiver. The Banks hereby waive the
Event of Default that would otherwise arise under Sections 5.08 and 6.01(b) of the Credit Agreement by reason of the Distribution.

Section 6.  Representations and Warranties.  The
Borrower hereby represents and warrants that as of the date hereof and after giving effect hereto:

(a)     no Default has occurred and is continuing; and

(b)     each representation and warranty of the
Borrower set forth in the Credit Agreement after giving effect to this Amendment is true and correct as though made on and as of such date.

Section 7.  Counterparts; Effectiveness.  This Amendment
may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Amendment shall
become effective simultaneously with consummation of the Borrower Merger, so long as prior to such time the Administrative Agent shall have received duly executed counterparts hereof signed by the
Borrower and the Required Banks (or, in the case of any party as to which an executed counterpart shall not have been received, the Administrative Agent shall have received
telegraphic, telex or other written confirmation from such party satisfactory to the Administrative Agent of execution of a counterpart hereof by such party).

 

2

 

 

Section 8.  Limited Effect. Except as expressly set
forth herein, the amendments contained herein shall not constitute a waiver or amendment of any term or condition of the Credit Agreement, and all such terms and conditions shall remain in full force
and effect and are hereby ratified and confirmed in all respects.

Section 9.  Governing Law.  This Amendment shall be
governed by and construed in accordance with the laws of the State of New York.

 

3

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their
respective authorized officers as of the day and year first above written.

 

	

             
 	

            DUKE ENERGY CORPORATION
 
   
 
	

             
	

            By:
 	

            /s/ S. L. Love
 
	

             
	

             
 	

            Name: S. L. Love
 
	

             
	

             
 	

            Title:   Assistant Treasurer
 

 

 

 

	

             
 	

            CITIBANK, N.A., as Administrative 
    Agent and as a Lender
 
   
 
	

             
	

            By:
 	

            /s/ Richard Evans
 
	

             
	

             
 	

            Name: Richard Evans
 
	

             
	

             
 	

            Title:     Vice President
 

 

 

 

	

             
 	

            BANK OF AMERICA, N.A.
 
   
 
	

             
	

            By:
 	

            /s/ Kevin Wagley
 
	

             
	

             
 	

            Name: Kevin Wagley
 
	

             
	

             
 	

            Title:   Senior Vice President
 

 

 

 

 

 

	

             
 	

            JPMORGAN CHASE BANK, N.A.
 
 
 
	

             
	

            By:
 	

            /s/ Michael J. DeForge
 
	

             
	

             
 	

            Name: Michael J. DeForge
 
	

             
	

             
 	

            Title:    Vice President
 

 

 

 

	

             
 	

            WACHOVIA BANK, NATIONAL ASSOCIATION
 
   
 
	

             
	

            By:
 	

            /s/ Lawrence P. Sullivan
 
	

             
	

             
 	

            Name:  Lawrence P. Sullivan
 
	

             
	

             
 	

            Title:     Director
 

 

 

 

	

             
 	

            BARCLAYS BANK PLC
 
   
 
	

             
	

            By:
 	

            /s/ Sydney G. Dennis
 
	

             
	

             
 	

            Name:  Sydney G. Dennis
 
	

             
	

             
 	

            Title:     Director
 
	

             
 	

             
 
	

             
	

             
 	

             
 
	

             
	

             
 	

             
 
	

             
	

             
 	

             
 

 

 

 

 

 

	

             
 	

            ABN AMRO BANK N.V.
 
   
 
	

             
	

            By:
 	

            /s/ John D. Reed
 
	

             
	

             
 	

            Name:  John D. Reed
 
	

             
	

             
 	

            Title:     Director
 
 
 
	

             
 	

             
 
	

             
	

            By:
 	

            /s/ Todd D. Vaubel
 
	

             
	

             
 	

            Name:  Todd D. Vaubel
 
	

             
	

             
 	

            Title:    Assistant Vice President
 

 

 

 

	

             
 	

            DEUTSCHE BANK AG NEW YORK 
    BRANCH
 
   
 
	

             
	

            By:
 	

            /s/ Marcus Tarkington
 
	

             
	

             
 	

            Name:  Marcus Tarkington
 
	

             
	

             
 	

            Title:    Director
 
 
 
	

             
 	

             
 
	

             
	

            By:
 	

            /s/ Rainer Meier
 
	

             
	

             
 	

            Name:  Rainer Meier
 
	

             
	

             
 	

            Title:    Vice President
 

 

 

 

 

 

	

             
 	

            UBS LOAN FINANCE LLC
 
   
 
	

             
	

            By:
 	

            /s/ Irja R. Otsa
 
	

             
	

             
 	

            Name:  Irja R. Otsa
 
	

             
	

             
 	

            Title:    Associate Director Banking Products Services US
 
 
 
	

             
 	

             
 
	

             
	

            By:
 	

            /s/ Richard L. Tavrow
 
	

             
	

             
 	

            Name:
 	

            Richard L. Tavrow
 
	

             
	

             
 	

            Title:
 	

            Director, Banking 
Products Services, US
 

 

 

 

	

             
 	

            LEHMAN BROTHERS BANK, FSB
 
   
 
	

             
	

            By:
 	

            /s/ Janine M. Shugan
 
	

             
	

             
 	

            Name:
 	

            Janine M. Shugan
 
	

             
	

             
 	

            Title:
 	

            Authorized Signatory
 

 

 

 

	

             
 	

            WILLIAM STREET COMMITMENT 
    CORPORATION
   

(Recourse only to assets of William Street 
Commitment Corporation)

 

 
 
	

             
	

            By:
 	

             
 
	

             
	

             
 	

            Name:
 	

             
 
	

             
	

             
 	

            Title:
 	

             
 

 

 

 

 

	

             
 	

            CREDIT SUISSE, CAYMAN ISLANDS BRANCH
 
 
 
	

             
	

            By:
 	

            /s/ Thomas R. Cantello
 
	

             
	

             
 	

            Name:
 	

            Thomas R. Cantello
 
	

             
	

             
 	

            Title:
 	

            Vice President
 
 
 
	

             
 	

             
 
	

             
	

            By:
 	

            /s/ Denise L. Alvarez
 
	

             
	

             
 	

            Name:
 	

            Denise L. Alvarez
 
	

             
	

             
 	

            Title:
 	

            Associate
 

 

 

 

	

             
 	

            MORGAN STANLEY BANK
 
   
 
	

             
	

            By:
 	

            /s/ Daniel Twenge
 
	

             
	

             
 	

            Name:
 	

            Daniel Twenge
 
	

             
	

             
 	

            Title:
 	

            Vice President
 

 

 

 

	

             
 	

            SUNTRUST BANK
 
   
 
	

             
	

            By:
 	

            /s/ Kelley Brandenburg
 
	

             
	

             
 	

            Name:
 	

            Kelley Brandenburg
 
	

             
	

             
 	

            Title:
 	

            Vice President
 

 

 

 

 

 

	

             
 	

            THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH
 
   
 
	

             
	

            By:
 	

            /s/ Linda Tam
 
	

             
	

             
 	

            Name:
 	

            Linda Tam
 
	

             
	

             
 	

            Title:
 	

            Authorized Signatory
 

 

 

 

	

             
 	

            THE ROYAL BANK OF SCOTLAND PLC, NEW YORK BRANCH
 
   
 
	

             
	

            By:
 	

            /s/ Emily Freedman
 
	

             
	

             
 	

            Name:
 	

            Emily Freedman
 
	

             
	

             
 	

            Title:
 	

            Vice President
 

 

 

 

	

             
 	

            DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
 
   
 
	

             
	

            By:
 	

            /s/ Thomas R. Brady
 
	

             
	

             
 	

            Name:
 	

            Thomas R. Brady
 
	

             
	

             
 	

            Title:
 	

            Director
 
 
 
	

             
 	

             
 
	

             
	

            By:
 	

            /s/ Brian Smith
 
	

             
	

             
 	

            Name:
 	

            Brian Smith
 
	

             
	

             
 	

            Title:
 	

            Managing Director
 

 

 

 

 

 

	

             
 	

            KEYBANK NATIONAL ASSOCIATION
 
 
 
	

             
	

            By:
 	

            /s/ Paul J. Pace
 
	

             
	

             
 	

            Name:
 	

            Paul J. Pace
 
	

             
	

             
 	

            Title:
 	

            Assistant Vice President
 

 

 

 

	

             
 	

            MIZUHO CORPORATE BANK, LTD.
 
   
 
	

             
	

            By:
 	

             
 
	

             
	

             
 	

            Name:
 	

             
 
	

             
	

             
 	

            Title:
 	

             
 

 

 

 

	

             
 	

            THE NORTHERN TRUST COMPANY
 
   
 
	

             
	

            By:
 	

            /s/ Preeti Sullivan
 
	

             
	

             
 	

            Name:
 	

            Preeti Sullivan
 
	

             
	

             
 	

            Title:
 	

            Vice President
 

 

 

 

 

	

             
 	

            WESTLB AG, NEW YORK BRANCH
 
   
 
	

             
	

            By:
 	

            /s/ Felicia La Forgia
 
	

             
	

             
 	

            Name:
 	

            Felicia La Forgia
 
	

             
	

             
 	

            Title:
 	

            Director
 
 
 
	

             
 	

             
 
	

             
	

            By:
 	

            /s/ Anthony Alessandro
 
	

             
	

             
 	

            Name:
 	

            Anthony Alessandro
 
	

             
	

             
 	

            Title:
 	

            Associate Director
 

 

 

 

	

             
 	

            SUMITOMO MITSUI BANKING CORPORATION
 
 
 
	

             
	

            By:
 	

            /s/ William M. Ginn
 
	

             
	

             
 	

            Name:
 	

            William M. Ginn
 
	

             
	

             
 	

            Title:
 	

            General Manager

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