EXHIBIT 10.9
THIRD AMENDMENT TO CREDIT
AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT ("Amendment") is made and
entered into this 30th day of August, 1999 by and between AKI, Inc., formerly
known as Arcade, Inc. ("Borrower") and Heller Financial, Inc. ("Lender").
WHEREAS, Lender and Borrower are parties to a certain Credit Agreement
dated April 30, 1996 and all amendments thereto (as such agreement has from time
to time been amended, supplemented or otherwise modified, the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement as hereinafter set
forth;
NOW THEREFORE, in consideration of the mutual conditions and agreements
set forth in the Agreement and this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Agreement.
2. Amendments. Subject to the conditions set forth below, the
Agreement is amended as follows:
(a) Subsection 1.2 is amended by deleting the definition of
"LIBOR" and inserting the following in lieu thereof:
"LIBOR" means, for each Interest Period, a rate per annum
equal to:
(a) the offered rate for deposits in U.S. dollars in an amount
comparable to the amount of the applicable Loan in the London interbank
market which is published by the British Bankers' Association, and that
currently appears on Telerate Page 3750, or any other source available
to Lender, as of 11:00 a.m. (London time) on the day which is two (2)
Business Days prior to the first day of the relevant Interest Period
for a term comparable to such Interest Period; or if, for any reason,
such a rate is not published by the British Bankers' Association on
Telerate or any other source available to Lender, the rate per annum
equal to the average rate (rounded upwards, if necessary, to the
nearest 1/100 of 1%) at which Lender determines that U.S. dollars in an
amount comparable to the amount of the applicable Loans are being
offered to prime banks at approximately 11:00 a.m. (London time) on the
day which is two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period for
settlement in immediately available funds by leading banks in the
London interbank market selected by Lender; divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior
to the beginning of such Interest Period (including, without
limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System
or other governmental authority having jurisdiction with respect
thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of such Board) which are required to be maintained by a
member bank of the Federal Reserve System; such rate to be rounded
upward to the next whole multiple of one-sixteenth of one percent
(.0625%).
(b) Subsection 4.3 is amended by deleting such subsection in
its entirety and inserting the following in lieu thereof:
"4.3 EBIDAT. Borrower shall not permit EBIDAT for the twelve
month (12) ending on the last day of any month, during the periods set
forth below to be less than the amount set forth below for such period:
Period Amount
July 1, 1999 through September 30, 1999 $20,000,000
October 1, 1999 through December 31, 1999 $25,500,000
January 1, 2000 through June 30, 2000 $27,800,000
July 1, 2000 through December 31, 2000 $28,800,000
January 1, 2001 through June 30, 2001 $29,800,000
July 1, 2001 through June 30, 2002 $32,000,000
July 1, 2002 and thereafter $34,300,000
"EBIDAT will be calculated as illustrated on Exhibit 4.6(C)."
(c) Subsection 4.4 is amended by deleting such subsection in
its entirety and inserting the following in lieu thereof:
"4.4 Fixed Charge Coverage.
Borrower shall not permit Fixed Charge
Coverage for the twelve (12) month period ending on the last
day of each month to be less than the amount set forth below
for such period:
Period Ratio
July 1, 1999 through September 30, 1999 1.05
October 1, 1999 through June 30, 2002 1.10
July 1, 2002 and thereafter 1.15
" Fixed Charge Coverage will be calculated as illustrated on
Exhibit 4.6(c)."
(d) Subsection 4.5 is amended by deleting such subsection in
its entirety and inserting the following in lieu thereof:
"4.5 Total Indebtedness to Operating Cash Flow Ratio.
Borrower shall not permit the ratio of Total
Indebtedness calculated as of the last day of any month during
the periods set forth below to Operating Cash Flow for the
twelve (12) month period ending on such day to be greater than
the amount set forth below for such period:
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Period Ratio
July 1, 1999 through September 30, 1999 7.9
October 1, 1999 through December 31, 1999 7.9
January 1, 2000 through June 30, 2000 7.2
July 1, 2000 through December 31, 2000 6.9
January 1, 2001 through June 30, 2001 6.7
July 1, 2001 through June 30, 2002 6.20
July 1, 2002 and thereafter 5.75
"Total Indebtedness, Operating Cash Flow, will be
calculated as illustrated as Exhibit 4.6(C)."
(e) Exhibit 4.6(C) is amended by deleting the portion of that
Exhibit setting forth the calculations for determining compliance with covenant
4.5 Total Indebtedness to Operating Cash Flow Ratio in its entirety and
substituting the calculations attached on Exhibit A.
3. Conditions. The effectiveness of this Amendment is subject to the
following conditions precedent (unless specifically waived in writing by
Lender):
(a) Borrower shall have executed and delivered this Amendment,
and such other documents and instruments as Lender may require shall have been
executed and/or delivered to Lender;
(b) All proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be satisfactory to Lender and its legal counsel;
(c) No Default or Event of Default shall have occurred and be
continuing.
4. Representations and Warranties. To induce Lender to enter into this
Amendment, Borrower represents and warrants to Lender:
(a) that the execution, delivery and performance of this
Amendment has been duly authorized by all requisite corporate action on the part
of Borrower and that this Amendment has been duly executed and delivered by
Borrower;
(b) each of the representations and warranties set forth in
Section 5 of the Agreement (Other than those which, by their terms, specifically
are made as of certain date prior to the date hereof) are true and correct in
all material respects as of the date hereof;
(c) Borrower has made an assessment of the microchip and
computer-based systems and the software used in its business, and based upon
such assessment, believes that it will be "Year 2000 Compliant" by January 1,
2000. For purposes of this paragraph, "Year 2000 Compliant" means that all
software, embedded microchips and other processing capabilities utilized by, and
material to the business operations or financial condition of, Borrower are able
to interpret, store, transmit, receive and manipulate data on and involving all
calendar dates correctly and without causing any abnormal ending scenarios in
relation to dates in and after the Year 2000. From time to time, at the request
of Lender, Borrower shall provide to Lender such updated information as is
requested regarding the status of its efforts to become Year 2000 Compliant.
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5. Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
6. References. Any reference to the Agreement contained in any
document, instrument or agreement executed in connection with the Agreement
shall be deemed to be a reference to the Agreement as modified by this
Amendment.
7. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument.
8. Ratification. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions of the
Agreement and shall not be deemed to be a consent to the modification or waiver
of any other term or condition of the Agreement. Except as expressly modified
and superseded by this Amendment, the terms and provisions of the Agreement are
ratified and confirmed and shall continue in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal and delivered by their respective duly authorized
officers on the date first written above.
Heller Financial, Inc. AKI, INC.
By: /S/ GEORGE F. KURTESON By /S/ KENNETH BUDDE
---------------------- ----------------------------
Title: Senior Vice President Title: Chief Financial Officer
AKI HOLDING CORP.
By: /S/ KENNETH BUDDE
----------------------------
Title: Chief Financial Officer
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EXHIBIT A to
EXHIBIT 4.6(C)
COMPLIANCE CERTIFICATE
AKI, INC.
Date: _______________, 199__
Covenant 4.5 Total Indebtedness to Operating Cash Flow Ratio
Total Indebtedness:
Average daily principal balance of the Revolving Loans for the one month period
ending on the date set forth above
$----------
Plus: Outstanding principal balance of all other Indebtedness,
excluding Subordinated Indebtedness held by SBA and
Refinanced Subordinated Indebtedness
-----------
Total Indebtedness $__________
Operating Cash Flow (defined in 4.4) $__________
Total Indebtedness to Operating Cash Flow Ratio ___________
Maximum Total Indebtedness to Operating Cash Flow Ratio
-----------
In Compliance Yes/No