Exhibit 4.6
FIFTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this "Amendment"),
dated as of February 6, 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 and that certain Fourth Amendment to Credit Agreement dated as of
September 27, 2002 (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 First 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 certain periods, 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) aggregate principal amount of Term Loans
outstanding under the Credit Agreement is $20,900,000. 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
------ -----
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 4.95:1
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 and the amendment and waiver fee paid
pursuant to Section 3 of the Fifth Amendment), (v) $250,000 in
Restructuring Charges for Fiscal Year 2002 and (vi) the amount of any
annual impairment charges taken by the Borrower in connection with FAS
Rule 142."
(b) Section 6.1(b) of the Credit Agreement is restated in its entirety to
read as follows:
"(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
------ -----
Third Quarter End 2002 1.15:1
Fiscal Year End 2002 1.00:1
Second Quarter End 2003 0.95:1
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 and the amendment and waiver fee paid
pursuant to Section 3 of the Fifth Amendment), (v) $250,000 in
Restructuring Charges for Fiscal Year 2002 and (vi) the amount of any
annual impairment charges taken by the Borrower in connection with FAS
Rule 142."
(c) Section 6.1(d) of the Credit Agreement is restated in its entirety to
read as follows:
"(d) Minimum Net Worth. Permit Net Worth of the Borrower and its
Subsidiaries on a consolidated basis, as of the end of any fiscal quarter of the
Borrower, to be less than $33,050,000 plus (i) with respect to each fiscal
quarter of the Borrower ending on or after First Quarter End 2001, 75% of any
Net Income as revealed by the Borrower's financial statements
for such fiscal quarter, such increase to become effective upon receipt of such
financial statements, plus (ii) 100% of the Net Proceeds of each Equity Offering
consummated after the date hereof, such increase to become effective
immediately, less the amount of any Permitted Stock Repurchase, such decrease to
become effective immediately, minus (iii) the amount of any charge to the
Borrower as a result of issuance of warrant agreements in connection with the
Loan Documents, minus (iv) the amount of any annual impairment charges taken by
the Borrower in connection with FAS Rule 142."
SECTION 2. Waivers.
(a) Section 6.1(a) of the Credit Agreement requires that the Maximum
Leverage Ratio not exceed 4.15:1.00 for First Quarter End 2003. The Borrower has
informed the Agent and the Lenders that its Maximum Leverage Ratio for such
period was 4.68:1.00. 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 1.00:1.00 for First Quarter End 2003. The
Borrower has informed the Agent and the Lenders that its Fixed Charge Coverage
Ratio for such period was 0.87:1.00. 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) an amendment fee equal to twenty basis points on the sum of the
outstanding Term Loans and the Aggregate Revolving Commitment, which is $51,800,
in immediately available funds, to be shared pro rata by the Lenders executing
this Amendment on or before the date hereof, 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
(d) 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 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).
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
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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 CORPORATION, as a Lender
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxx
-----------------------------------
Title: Manager
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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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S-1
U.S. BANK NATIONAL ASSOCIATION, as a
Lender
By: /s/ X. X. Xxxxxxxxx
-------------------------------------
Name: X. X. Xxxxxxxxx
-----------------------------------
Title: Vice President
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S-2
