Exhibit 4.1
SIXTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this "Amendment"),
dated as of May 27, 2003, is entered into among (1) ALPHA TECHNOLOGIES GROUP,
INC., a Delaware corporation (the "BORROWER"), (2) the Lenders party to the
Credit Agreement referred to below and (3) UNION BANK OF CALIFORNIA, N.A., as
administrative agent for the Lenders (in such capacity, the "AGENT").
RECITALS
A. The Borrower, the Lenders and the Agent previously entered into that
certain Credit Agreement dated as of December 26, 2000, as amended by that
certain Amendment to Credit Agreement and Waiver dated as of January 28, 2002,
that certain Second Amendment to Credit Agreement and Waiver dated as of March
4, 2002, that certain Third Amendment to Credit Agreement and Waiver dated as of
July 24, 2002, that certain Fourth Amendment to Credit Agreement dated as of
September 27, 2002 and that certain Fifth Amendment to Credit Agreement and
Waiver dated as of February 6, 2003 (as amended, the "CREDIT AGREEMENT").
Capitalized terms used herein and not defined shall have the meanings assigned
to them in the Credit Agreement.
B. The Borrower has informed the Agent and the Lenders that it is in
default of the Maximum Leverage Ratio covenant contained in Section 6.1(a) and
the Fixed Charge Coverage Ratio covenant contained in Section 6.1(b) of the
Credit Agreement for its Second Quarter End 2003.
C. In connection therewith, the Borrower has requested that the Lenders
(i) waive such Events of Default and (ii) modify the Maximum Leverage Ratio and
Fixed Charge Coverage Ratio covenants for Second Quarter End 2003, as more fully
set forth herein. The Lenders have agreed to grant such waiver and make such
changes, in each case subject to the terms and conditions set forth herein .
D. As of the date hereof, prior to the effectiveness of this Amendment,
(i) the aggregate principal amount of Revolving Loans outstanding under the
Credit Agreement is $3,200,000 and (ii) the aggregate principal amount of Term
Loans outstanding under the Credit Agreement is $20,150,000. The Aggregate
Revolving Loan Commitment is $5,000,000. There are no Letters of Credit
outstanding.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is hereby
amended as follows effective as of the date first set forth above, subject to
satisfaction of the conditions precedent set forth in Section 3 below:
(a) Section 6.1(a) of the Credit Agreement is restated in its entirety to
read as follows:
"(a) MAXIMUM LEVERAGE RATIO. Permit the Maximum Leverage Ratio, as of the
end of any fiscal quarter of the Borrower, to exceed the following levels for
the periods indicated:
Period Ratio
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Third Quarter End 2002 5.00:1
Fiscal Year End 2002 4.45:1
First Quarter End 2003 4.70:1
Second Quarter End 2003 5.50:1
Third Quarter End 2003 4.90:1
Fiscal Year End 2003 4.50:1
First Quarter End 2004 through and 1.85:1
including Fiscal Year End 2004
First Quarter End 2005 and thereafter 1.75:1
; PROVIDED, that for purposes of calculating the covenant in this Section 6.1(a)
only, the definition of "EBITDA" shall be deemed to read as follows:
"EBITDA": for the Borrower and its Subsidiaries on a consolidated
basis, for the fiscal quarter most recently ended and the immediately
preceding three fiscal quarters, Net Income after eliminating extraordinary
gains and losses, plus, without duplication, (i) provisions for income
taxes, (ii) depreciation and amortization, (iii) Interest Expense, (iv)
loan fees paid in connection with the Loan Documents (including (x) the
effect, if any, of execution of warrant agreements in connection with the
Loan Documents and (y) the amendment and waiver fee paid pursuant to the
Third Amendment, the amendment fee paid pursuant to Section 3 of the Fourth
Amendment, the amendment and waiver fee paid pursuant to Section 3 of the
Fifth Amendment and the amendment fee paid pursuant to Section 3 of the
Sixth Amendment), (v) $250,000 in Restructuring Charges for Fiscal Year
2002, (vi) the amount of any annual impairment charges taken by the
Borrower in connection with FAS Rule 142 and (vii) consultant fees paid in
connection with Tactical Solutions, LLC's review of the Borrower."
(b) Section 6.1(b) of the Credit Agreement is restated in its entirety to
read as follows:
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"(b) FIXED CHARGE COVERAGE RATIO. Permit the Fixed Charge Coverage Ratio,
as of the end of any fiscal quarter of the Borrower, to be less than the
following levels for the periods indicated:
Period Ratio
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Third Quarter End 2002 1.15:1
Fiscal Year End 2002 1.00:1
Second Quarter End 2003 0.52:1
Third Quarter End 2003 1.10:1
Fiscal Year End 2003 1.15:1
First Quarter End 2004 through and 0.80:1
including Fiscal Year End 2004
First Quarter End 2005 and thereafter 0.85:1
; PROVIDED, that for purposes of calculating the covenant in this Section 6.1(b)
only,
(i) the Fixed Charge Coverage Ratio for Fiscal Year End 2002 shall be based on
the fiscal quarter most recently ended and the immediately preceding two fiscal
quarters only, without reference to any other fiscal quarter, and the Fixed
Charge Coverage Ratio for each of Second Quarter End 2003, Third Quarter End
2003 and Fiscal Year End 2003 shall be based on such respective fiscal quarter
only, without reference to any other fiscal quarter; and
(ii) the definition of "EBITDA" shall be deemed to read as follows:
"EBITDA": for the Borrower and its Subsidiaries on a consolidated
basis, for the fiscal quarter most recently ended and the immediately
preceding three fiscal quarters, Net Income after eliminating extraordinary
gains and losses, PLUS, without duplication, (i) provisions for income
taxes, (ii) depreciation and amortization, (iii) Interest Expense, (iv)
loan fees paid in connection with the Loan Documents (including (x) the
effect, if any, of execution of warrant agreements in connection with the
Loan Documents and (y) the amendment and waiver fee paid pursuant to the
Third Amendment, the amendment fee paid pursuant to Section 3 of the Fourth
Amendment, the amendment and waiver fee paid pursuant to Section 3 of the
Fifth Amendment and the amendment fee paid pursuant to Section 3 of the
Sixth Amendment), (v) $250,000 in Restructuring Charges for Fiscal Year
2002, (vi) the amount of any annual impairment charges taken by the
Borrower in connection with FAS Rule 142 and (vii) consultant fees paid in
connection with Tactical Solutions, LLC's review of the Borrower."
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SECTION 2. WAIVERS.
(a) Section 6.1(a) of the Credit Agreement requires that the Maximum
Leverage Ratio not exceed 4.95:1.00 for Second Quarter End 2003. The Borrower
has informed the Agent and the Lenders that its Maximum Leverage Ratio for such
period was 5.47:1.00. As a result of such noncompliance, an Event of Default has
occurred and is continuing under the Credit Agreement. At the Borrower's
request, the Lenders agree to waive such Event of Default, subject to the terms
and conditions set forth herein.
(b) Section 6.1(b) of the Credit Agreement requires that the Fixed Charge
Coverage Ratio not be less than 0.95:1.00 for Second Quarter End 2003. The
Borrower has informed the Agent and the Lenders that its Fixed Charge Coverage
Ratio for such period was 0.54:1.00. As a result of such noncompliance, an Event
of Default has occurred and is continuing under the Credit Agreement. At the
Borrower's request, the Lenders agree to waive such Event of Default, subject to
the terms and conditions set forth herein.
(c) The foregoing waivers are given in this instance only. The foregoing
waivers shall not be construed as a waiver of or consent to any violation of, or
deviation from, any other term or condition of the Credit Agreement or any other
Loan Document, nor shall such waivers be construed to evidence the willingness
of the Agent or the Lenders to give any other or additional waiver, whether in
similar or different circumstances.
SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become effective as
of the date first set forth above upon receipt by the Agent of the following:
(a) this Amendment, duly executed by the Borrower and the Majority Lenders;
(b) evidence of the Guarantors' consent to this Amendment, substantially in
the form of EXHIBIT A hereto;
(c) evidence in form and substance satisfactory to the Agent that the
insurance policies provided for in Section 5.5 of the Credit Agreement
(including keyman insurance) are in full force and effect, together with
appropriate evidence showing the Agent as an additional named insured or loss
payee, as appropriate, for the benefit of the Lenders;
(d) an amendment fee equal to fifteen basis points on the sum of the
outstanding Term Loans and the Aggregate Revolving Commitment, which is $37,725,
in immediately available funds, to be shared pro rata by the Lenders executing
this Amendment on or before May 27, 2003, and all outstanding fees and expenses
of the Agent including legal fees incurred in connection with the negotiation,
drafting and execution of this Amendment to the extent requested by the Agent to
be paid in connection herewith; and
(e) such other documents, agreements and opinions as the Agent or any
Lender may request.
SECTION 4. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.(a) Upon the effectiveness of this Amendment, each reference in
the Credit Agreement to "this Agreement," "hereunder," "hereof" or words of like
import referring to the Credit
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Agreement, and each reference in the other Loan Documents to "the Credit
Agreement," "thereunder," "thereof" or words of like import referring to the
Credit Agreement, shall mean and be a reference to the Credit Agreement, as
amended hereby.
(b) Except as specifically amended herein, the Credit Agreement and all
other Loan Documents are and shall continue to be in full force and effect and
are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of the Agent or the Lenders
under the Credit Agreement or any other Loan Documents, nor constitute a waiver
of any provision of the Credit Agreement or any other Loan Documents, except as
specifically set forth herein.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants, for the benefit of the Lenders and the Agent, as follows: (i) the
Borrower has all requisite power and authority under applicable law and under
its charter documents to execute, deliver and perform this Amendment, and to
perform the Credit Agreement as amended hereby; (ii) all actions, waivers and
consents (corporate, regulatory and otherwise) necessary or appropriate for the
Borrower to execute, deliver and perform this Amendment, and to perform the
Credit Agreement as amended hereby, have been taken and/or received; (iii) this
Amendment, and the Credit Agreement, as amended by this Amendment, constitute
the legal, valid and binding obligation of the Borrower enforceable against it
in accordance with the terms hereof; (iv) the execution, delivery and
performance of this Amendment, and the performance of the Credit Agreement, as
amended hereby, will not (a) violate or contravene any material Requirement of
Law, (b) result in any material breach or violation of, or constitute a material
default under, any agreement or instrument by which the Borrower or any of its
property may be bound, or (c) result in or require the creation of any Lien upon
or with respect to any properties of the Borrower, whether such properties are
now owned or hereafter acquired; (v) the representations and warranties
contained in the Credit Agreement and the other Loan Documents are correct in
all material respects on and as of the date of this Amendment, after giving
effect to the same, as though made on and as of such date; and (vi) except as
discussed in Section 2 of this Amendment, no Default has occurred and is
continuing.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.
SECTION 7. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA (WITHOUT
REFERENCE TO ITS CHOICE OF LAW RULES).
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
ALPHA TECHNOLOGIES GROUP, INC.
By: /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Chairman and Chief Executive
Officer
UNION BANK OF CALIFORNIA, N.A., as Agent
and as a Lender
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
CALIFORNIA BANK & TRUST, as a Lender
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
IBM CREDIT LLC, as a Lender
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Manager, Global Special Handling
MANUFACTURERS BANK
A California Banking Corporation,
as a Lender
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Vice President
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U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ X. X. Xxxxxxxxx
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Vice President
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