EXHIBIT 4.2
AMENDMENT TO CREDIT AGREEMENT AND WAIVER
THIS AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this "Amendment"), dated
as of January 28, 2002, 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, 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 fiscal year ended October 28, 2001. The Borrower has
requested that the Lenders waive the Events of Default caused by such
noncompliance.
C. As of the date hereof, prior to the effectiveness of this Amendment,
(i) the Revolving Loan Commitment is $15,000,000 and (ii) the aggregate
principal amount of Revolving Loans outstanding under the Credit Agreement is
$2,200,000. There are no Letters of Credit outstanding.
D. The Lenders have agreed to waive the foregoing Events of Default,
subject to the terms and conditions set forth herein.
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 4
below:
(a) The Aggregate Revolving Loan Commitment is reduced from $15,000,000
to $5,000,000. In connection therewith, the respective amount of each Lender's
Revolving Loan Commitment set forth on the signature pages to the Credit
Agreement are replaced with the following respective amounts:
UNION BANK OF CALIFORNIA, N.A. $1,500,000
CALIFORNIA BANK & TRUST $950,000
IBM CREDIT CORPORATION $875,000
MANUFACTURERS BANK $800,000
U.S. BANK NATIONAL ASSOCIATION $875,000
(b) The definition of "Applicable Margin" contained in Section 1.1 of
the Credit Agreement is restated in its entirety to read as follows:
"'APPLICABLE MARGIN': for LIBOR Loans, Base Rate Loans and commitment
fees, as applicable, subject to Section 2.8(d), as set forth below:
Leverage Level LIBOR Margin Base Rate Margin Commitment Fee
-------------- ------------ ---------------- --------------
1 (<1.50) 2.00% per annum 0.25% per annum 0.250% per annum
2 (>1.50 <2.00) 2.25% per annum 0.50% per annum 0.375% per annum
3 (>2.00 <2.50) 3.00% per annum 1.25% per annum 0.500% per annum
4 (>2.50 <3.00) 3.25% per annum 1.50% per annum 0.625% per annum
5 (>3.00) 3.50% per annum 1.75% per annum 0.750% per annum"
(c) The definition of "Borrowing Base" in Section 1.1 of the Credit
Agreement is restated in its entirety to read as follows:
"'BORROWING BASE': as at any date of determination, an amount equal to
60% of Eligible Accounts Receivable."
(d) The definition of "EBITDA" in Section 1.1 of the Credit Agreement
is restated in its entirety 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 and (iv) loan fees (including the effect, if
any, of execution of the warrant agreements being executed in
connection with the First Amendment) paid by the Borrower to the Agent
and the Lenders in connection with the First Amendment."
(e) Section 1.1 of the Credit Agreement is amended to add the following
definition in appropriate alphabetical order:
"'FIRST AMENDMENT': that certain Amendment to Credit
Agreement and Waiver dated as of January 28, 2002 entered into among
the Borrower, the Lenders and the Agent amending this Agreement."
(f) The definition of "Leverage Level" contained in Section 1.1 of the
Credit Agreement is restated in its entirety to read as follows:
"'LEVERAGE LEVEL': if the Maximum Leverage Ratio shall be less
than or equal to 1.50:1, the Leverage Level shall be 1; if the Maximum
Leverage Ratio shall be greater than 1.50:1 and less than or equal to
2.00:1, the Leverage Level shall be 2; if the Maximum Leverage Ratio
shall be greater than 2.00:1 and less than or equal to 2.50:1, the
Leverage Level shall be 3; if the Maximum Leverage Ratio shall be
greater than
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2.50:1 and less than or equal to 3.00:1, the Leverage
Level shall be 4; and if the Maximum Leverage Ratio shall be greater
than 3:00:1, the Leverage Ratio shall be 5."
(g) The definition of "Loan Documents" contained in Section 1.1 of the
Credit Agreement is hereby amended by inserting the words "the Warrant
Agreements," immediately following the words "any Hedge Agreements,".
(h) The definition of "Revolving Loan Commitment Expiration Date" in
Section 1.1 of the Credit Agreement is restated in its entirety to read as
follows:
"'REVOLVING LOAN COMMITMENT EXPIRATION DATE': June 30, 2003,
or such earlier date as the Revolving Loan Commitments shall expire in
accordance with the terms hereof (whether by acceleration or
otherwise)."
(i) Section 1.1 of the Credit Agreement is amended to add the following
definition in appropriate alphabetical order:
"'WARRANT AGREEMENTS': those certain warrants, each entitled
Warrant to Purchase Shares of Common Stock, dated as of January 28,
2002, executed by the Borrower in favor of each Lender existing on such
date, or such Lender's affiliate as determined by such Lender, in form
and substance satisfactory to the Lenders, as such warrants may be
amended, modified or restated from time to time in accordance with the
terms hereof. The aggregate fair market value and aggregate purchase
price of such warrants shall be $57,359.43, which assigned value shall
be apportioned on a pro-rata basis in accordance with the number of
shares issuable upon exercise of each warrant. The Borrower and the
initial holders of such warrants agree to use the foregoing fair market
value and purchase price for United States federal income tax purposes
with respect to all transactions involving such warrants (unless
otherwise required by a final determination by the United States
Internal Revenue Service or a court of competent jurisdiction)."
(j) The proviso in the first paragraph of Section 2.1(a) of the Credit
Agreement is hereby amended as follows: (i) immediately following the words "the
Borrowing Base at any time," insert the words ", nor exceed $4,250,000 without
the prior written consent of the Majority Lenders," and (ii) the word
"$1,000,000" is replaced by the word "$500,000."
(k) The final sentence of Section 2.4 of the Credit Agreement is
restated in its entirety to read as follows:
"Partial prepayments of Revolving Loans shall be in the
aggregate principal amount of $500,000 or an integral multiple of
$100,000 in excess thereof."
(l) Section 2.5(a) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(a) If at any time the sum of (A) the aggregate principal
amount of all Revolving Loans outstanding, (B) the aggregate Letter of
Credit Amount of all Letters of Credit outstanding and (C) the
aggregate amount of unreimbursed drawings under all
3
Letters of Credit exceeds the Aggregate Revolving Loan Commitment
and/or the Borrowing Base, or if such sum exceeds $4,250,000 without
the prior written consent of the Majority Lenders, then, in such case,
the Borrower shall immediately, without notice or request by the Agent,
prepay the Revolving Loans and/or, if one or more Letters of Credit are
outstanding, pledge cash collateral to the Agent to secure
reimbursement of amounts available to be drawn thereunder, in an
aggregate amount equal to such excess."
(m)Section 2.5(e) of the Credit Agreement is hereby amended by adding a
proviso immediately prior to the period at the end of the first sentence to read
as follows:
"; PROVIDED THAT, so long as no Default has occurred and is continuing,
no prepayment shall be required under this Section 2.5(e) unless the amount of
such Net Proceeds received by the Borrower and not delivered to the Agent
hereunder equals $100,000 or more".
(n) Section 2.8(d) of the Credit Agreement is hereby amended by
replacing the reference to "Level 4" with the term "Level 5."
(o) Section 5.1 of the Credit Agreement is hereby amended as follows:
(i) the word "and" is deleted immediately following the semicolon at the end of
Section 5.1(a) of the Credit Agreement; (ii) the word "and" is added immediately
following the semicolon at the end of Section 5.1(b) of the Credit Agreement;
and (iii) Section 5.1(c) is added to the Credit Agreement to read as follows:
"(c) as soon as available, but in any event not later than 30
days after the end of each fiscal month of the Borrower, the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries for
such month and the related unaudited income statement and operating
cash flow statement for such month and the portion of the fiscal year
through the end of such month, certified by a Responsible Officer of
the Borrower as being fairly stated in all material respects (subject
to normal year-end audit adjustments);".
SECTION 2. WAIVER.
(a) Section 6.1(a) of the Credit Agreement requires that the Maximum
Leverage Ratio not exceed 2.25:1.00 for the Fiscal Year End 2001. The Borrower
has informed the Agent and the Lenders that its Maximum Leverage Ratio for such
period was 3.77:1.00. 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 1.20:1.00 for the Fiscal Year End 2001.
The Borrower has informed the Agent and the Lenders that its Fixed Charge
Coverage Ratio for such period was 0.92:1.00. 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.
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(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. ADDITIONAL COVENANTS OF THE BORROWER. In addition to the
covenants set forth in the Credit Agreement, the other Loan Documents and this
Agreement, the Borrower hereby agrees as follows:
(a) The Borrower acknowledges that the Lenders intend to perform an
audit of the books, records, operations and business of the Borrower and its
Subsidiaries commencing on or about January 15, 2002. Such audit shall be
performed by an auditor acceptable to the Agent, and all fees, costs and
expenses of such audit shall be for the account of the Borrower. The Borrower
agrees to cooperate in and facilitate such audit in all respects, including but
not limited to by providing access to its books and records, properties and key
employees.
(b) The Borrower acknowledges that the Lenders intend to perform an
evaluation of the fixed assets and inventory of the Borrower and its
Subsidiaries commencing on or about January 18, 2002. Such evaluation shall be
performed by a party acceptable to the Agent, and all fees, costs and expenses
of such evaluation shall be for the account of the Borrower. The Borrower agrees
to cooperate in and facilitate such evaluation in all respects, including but
not limited to by providing access to its books and records, properties and key
employees.
(c) Any failure of the Borrower to perform any of the covenants set
forth in this Section 3 in accordance with their terms shall constitute an
immediate Event of Default having no grace period.
SECTION 4. 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 Lenders;
(b) evidence of the Guarantors' consent to this Amendment,
substantially in the form of Exhibit A hereto;
(c) modification of the Mortgage, in form and substance to the Agent,
and such title endorsement(s) as the Agent shall reasonably request;
(d) the Warrant Agreements, substantially in the form of Exhibit B
hereto, duly executed by the Borrower and exercisable for an aggregate amount of
33,333 common shares of the Borrower;
(e) resolutions of the board of directors of the Borrower, authorizing
this Amendment and the Warrant Agreements, certified by a Responsible Officer of
the Borrower;
(f) an opinion of counsel to the Borrower regarding the Warrant
Agreements, in form and substance satisfactory to the Agent;
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(g) a waiver fee of $91,657.50, in immediately available funds, to be
shared pro rata by each Lender; and
(h) such other documents, agreements and opinions as the Agent or any
Lender may request.
SECTION 5. CONDITION SUBSEQUENT. The continuing effectiveness of this
Amendment is subject to the condition subsequent that, not later than 30 days
after the execution, delivery and effectiveness of this Amendment, the Borrower
and the Guarantors execute and deliver control agreements, in form and substance
reasonably satisfactory to the Agent, to perfect all security interests in
deposit accounts granted pursuant to the Security Agreement and the Guarantor
Security Agreement, as applicable (it being understood that any failure to
satisfy such condition shall constitute an Event of Default under Section 7(a)
of the Credit Agreement having no grace period). The Borrower agrees to promptly
execute such agreements when and if presented to it by the Agent.
SECTION 6. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE
OTHER LOAN DOCUMENTS. 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 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 7. 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
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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 referred to in Section 2 hereof, no Default has
occurred and is continuing.
SECTION 8. 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 9. 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: Chief Executive Officer
UNION BANK OF CALIFORNIA, N.A. as Agent
and as a Lender
By:
---------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
CALIFORNIA BANK & TRUST, as a Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
IBM CREDIT CORPORATION, as a Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MANUFACTURERS BANK
A California Banking Corporation, as a
Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
S-1
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:
---------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Chief Executive Officer
UNION BANK OF CALIFORNIA, N.A. as Agent
and as a Lender
By: /s/ Xxxx X. Xxxx
---------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
CALIFORNIA BANK & TRUST, as a Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
IBM CREDIT CORPORATION, as a Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MANUFACTURERS BANK
A California Banking Corporation, as a
Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
S-1
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:
---------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Chief Executive Officer
UNION BANK OF CALIFORNIA, N.A. as Agent
and as a Lender
By:
---------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
CALIFORNIA BANK & TRUST, as a Lender
By: /s/ Xxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxx X. Xxxx
-------------------------------------
Title: Vice President
------------------------------------
IBM CREDIT CORPORATION, as a Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MANUFACTURERS BANK
A California Banking Corporation, as a
Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
S-1
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:
---------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Chief Executive Officer
UNION BANK OF CALIFORNIA, N.A. as Agent
and as a Lender
By:
---------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
CALIFORNIA BANK & TRUST, as a Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
IBM CREDIT CORPORATION, as a Lender
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------------------
Title: Manager of Credit
------------------------------------
MANUFACTURERS BANK
A California Banking Corporation, as a
Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
S-1
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: Xxxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Chief Executive Officer
UNION BANK OF CALIFORNIA, N.A. as Agent
and as a Lender
By:
---------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
CALIFORNIA BANK & TRUST, as a Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
IBM CREDIT CORPORATION, as a Lender
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MANUFACTURERS BANK
A California Banking Corporation, as a
Lender
By: /s/ Xxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxx
-------------------------------------
Title: Assistant Vice President
------------------------------------
S-1
U.S. BANK NATIONAL ASSOCIATION, as a
Lender
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
-------------------------------------
Title: Vice President
------------------------------------
S-2
EXHIBIT A
GUARANTORS' CONSENT
Each of the undersigned is a "Guarantor" under that certain Subsidiary
Guarantee dated as of January 9, 2001 (the "GUARANTEE") made by the undersigned
in favor of Union Bank of California, N.A., as agent (the "AGENT") for the
benefit of the lenders referred to below, which Guarantee was delivered pursuant
to that certain Credit Agreement dated as of even date therewith among Alpha
Technologies Group, Inc. (the "BORROWER"), the lenders referred to therein (the
"LENDERS"), and the Agent (as amended, the "CREDIT AGREEMENT"). As to Wakefield
Thermal Solutions, Inc., references herein to the Guarantee shall include
obligations of itself and as successor by merger of National Northeast
Corporation.
In connection herewith, the Credit Agreement is being amended by that
certain Amendment to Credit Agreement and Waiver dated as of even date herewith
(the "AMENDMENT"). Each Guarantor hereby acknowledges that it has received a
copy of the Amendment. Each Guarantor hereby consents to the Amendment, and
hereby confirms and agrees that the Guarantee is and shall continue to be in
full force and effect and is hereby ratified and confirmed in all respects
except that, on and after the effective date of the Amendment, each reference in
the Guarantee to "the Credit Agreement," "thereunder," "thereof," "therein" or
words of like import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement, as amended by the Amendment.
Dated: January 28, 2002
WAKEFIELD THERMAL SOLUTIONS, INC.
(formerly known as Wakefield Engineering,
Inc. and successor by merger of National
Northeast Corporation)
By: ______________________________________
Name: Xxxxxxxx Xxxxxx
Title: Vice President
SPECIALTY EXTRUSION CORP.
By: ______________________________________
Name: Xxxxxxxx Xxxxxx
Title: Vice President
XXXXXXXX INDUSTRIES, INC.
By: ______________________________________
Name: Xxxxxxxx Xxxxxx
Title: Vice President
